How does virtual currency bribery reveal its true form? The complete chain from 2000 ETH to villa transactions

A recent exposure of a corruption case involving virtual currencies highlights how blockchain technology can be used to trace hidden corruption. The main figure in the case is姚前, the former director of the Digital Currency Research Institute of the People’s Bank of China, who was placed under investigation in April 2024.

How the Chain of Virtual Currency Bribery Was Cracked

The investigation team utilized blockchain features to successfully trace the complete flow of virtual currencies. In 2018, 2000 ETH (currently valued at approximately $6.42 million) was transferred from a businessman Zhang’s wallet to姚前’s personal virtual currency wallet. Behind this virtual asset was a quid pro quo: Zhang, through姚前’s subordinate蒋国庆, requested姚前 to assist with a token issuance and financing project.

姚前 used his authority to contact a virtual currency exchange, ultimately helping Zhang’s company successfully issue tokens and raise 20,000 ETH. As a token of appreciation, Zhang transferred 2000 ETH to姚前.

From Virtual Assets to Real Estate Exchange

More critically, the investigation team also traced the cashing out process of the virtual currencies. In 2021,姚前 exchanged 370 ETH for 10 million yuan in cash, which was subsequently used to pay part of the down payment for a Beijing villa. The villa, valued at over 20 million yuan, was registered under姚前’s relative’s name but was actually owned by姚前.

How “Mafia Accounts” Conceal Quid Pro Quo Transactions

To evade regulation,姚前 established multiple “mafia accounts”—bank accounts opened under others’ names but controlled by him personally. The investigation team identified these accounts through big data cross-checks and conducted four-layer tracing analysis. The funds flowing in and out of these “mafia accounts” were linked to large-scale quid pro quo transactions.

In addition to the 10 million yuan from virtual currency cashing out, two other inflows totaling 12 million yuan were used to pay for the villa. These 12 million yuan came from an information services company controlled by businessman Wang, and姚前 used his authority to assist the company in providing technological services in the securities and futures industry, forming a complete chain of利益输送 (benefit transfer).

Key Role of Subordinates in the Corruption Chain

It is noteworthy that姚前’s subordinate蒋国庆 participated in nearly all of his large-scale quid pro quo transactions. 蒋国庆 acted as an intermediary, introducing the requester and the boss to姚前, and also took a share of the benefits. In the virtual currency bribery case,蒋国庆 was also involved, having previously worked with姚前 at the Digital Currency Research Institute of the People’s Bank of China and the Science and Technology Department of the China Securities Regulatory Commission, becoming a trusted confidant of姚前.

By controlling hardware wallets, tracking virtual currency flows, and analyzing the “mafia account” system, this case demonstrates a new approach to utilizing modern technology to identify and combat hidden corruption.