China's Prosecutors Say Using Mixers = Guilty Until Proven Innocent 🪙

China's Supreme People's Procuratorate is weighing a presumption-of-guilt framework that would treat the use of crypto mixers, privacy coins, and anonymous large transfers as evidence of money laundering unless suspects produce "reasonable counter-evidence," according to an article published in the Procuratorate Daily, the official newspaper of the country's top prosecution office. The proposal, authored by two district prosecutors in Hunan province and a university law professor, carries no legal force but reflects the thinking of a prosecution system that charged more than 3,000 people with crypto-related money laundering in 2024 alone.

The authors argue that China's existing money-laundering offense, which covers only seven categories of predicate crime, has forced prosecutors to lean on a broader concealment charge they describe as an overstretched catch-all. They urge a "double investigation of one case" rule that would screen every underlying offense for laundering and require investigators to trace any crypto flows involved, building on a 2024 judicial interpretation from China's Supreme People's Court that already classifies using virtual-asset transactions to move criminal proceeds as a form of laundering.

On the question of proof, the article proposes that courts presume criminal intent when suspects use transaction-obscuring tools such as mixers or privacy coins, offload large amounts of crypto at "obviously unreasonable" prices, or run high-frequency, large-scale transfers through anonymous wallets with no link to their identity. It also floats a "blockchain data self-verification" principle under which on-chain records verifiable on a public block explorer with matching hash values would be treated as presumptively genuine, shifting the burden onto whoever disputes them. Reports from compliant blockchain analytics firms, including fund flow maps and address clustering, would count as expert evidence, and laundering could be established from circumstantial, fragmentary evidence that forms a coherent chain even if not every coin is traced to its source.

Separately, China's central bank and nine other regulators issued a joint notice on Friday banning unapproved yuan-linked stablecoin issuance and classifying most real-world asset tokenization as illegal. The notice frames virtual currencies, stablecoins, and tokenized assets as sources of systemic financial risk, reaffirming that cryptocurrencies lack legal tender status and that related trading, issuance, and intermediary services remain prohibited.

The article also addresses what China should do with seized crypto, noting that because Beijing bans trading, authorities confiscating tokens have no straightforward legal channel to dispose of them and proposing a state-built platform to sell off seized cryptocurrency.