Chinese short-video giant Kuaishou is grappling with a $20 million internal fraud and money laundering scheme. The scandal involves eight employees who exploited bonus systems and laundered funds through Bitcoin.
Kuaishou, a major rival to TikTok, has been rocked by a high-profile internal fraud and money laundering case. According to a report by People’s Daily, a state-run newspaper in China, eight employees carried out a year-long scheme in which they siphoned off nearly 140 million yuan (approximately $20 million) from the company and laundered it through Bitcoin.
Insider Exploits Bonus System to Steal Millions
A Kuaishou insider named Feng led the scheme. He orchestrated the fraud using his unchecked control over internal financial operations.
According to People’s Daily, Feng had authority over the selection of third-party vendors, the calculation of performance bonuses, and the approval of payments, areas that lacked sufficient oversight.
Feng exploited these vulnerabilities to engineer loopholes in the reward subsidy system. He also shared sensitive internal data with two outside collaborators, Tang and Yang.
Together, they fabricated documentation to qualify for large bonus payouts fraudulently. These fake bonuses were directed to shell companies secretly set up by the group, effectively draining millions from Kuaishou’s accounts.
Shell Companies and Crypto Used to Obscure the Trail
To conceal the stolen funds, the conspirators established multiple shell companies —entities that existed only on paper, with no actual business operations. The stolen money passed through these entities to various accounts to obscure its origin.
Notably, the final step involved converting the funds into Bitcoin via over-the-counter (OTC) crypto desks and coin mixers. These tools are commonly used to anonymize blockchain transactions.
Prosecutors revealed the group used eight global platforms to distribute the funds across several crypto wallets, creating what they described as a “closed-loop” laundering system.
Authorities Trace Funds Through Blockchain Forensics
Despite the sophisticated laundering operation, Chinese authorities successfully tracked the stolen assets. The case was investigated by the People’s Procuratorate of Haidian District, which specializes in technology-related crimes.
Prosecutor Li Tao led the investigation, using transaction records, cash flow data, and internal company documents to reconstruct the fraud. Through blockchain analysis and international cooperation, investigators recovered 92 BTC worth approximately $11.7 million.
Court Hands Down Heavy Sentences
Following the investigation, the court imposed strict sentences for all parties involved. Feng received the longest term, 14 years and six months in prison. Other members of the group received sentences ranging from 3 to 14 years, along with substantial fines. Notably, the court convicted all of them of occupational embezzlement.
The case has been officially recognized as one of the most sophisticated corruption cases in China’s tech industry. It was highlighted in a newly released White Paper on Anti-Commercial Corruption (2020–2024) and covered in detail by People’s Daily.
Legal analysts say this case highlights serious gaps in internal oversight within fast-growing tech companies, especially where employees hold too much discretionary power over financial systems.
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