New Trends in Cryptocurrency Crime: From Personal Information Trafficking to Large-Scale Money Laundering

In recent years, with the continuous expansion of the cryptocurrency asset market and criminals' deeper understanding of the regulatory rules of various countries, the methods of using cryptocurrency assets for Money Laundering have also been rapidly upgraded. This not only includes Money Laundering methods that combine fiat currency and cryptocurrency assets but also the emergence of more covert and complex methods such as mismatched Money Laundering involving cryptocurrency assets and physical assets. These behaviors not only affect the financial order of various countries but also lead to issues such as foreign exchange outflow and a surge in new types of cyber crimes.

Recently, a major case involving the use of encryption assets for Money Laundering 2 billion yuan, as well as the sale of personal information of Chinese citizens abroad, has been disclosed. This case reveals the latest trends in crimes related to encryption assets in our country.

A special "case within a case" involving encrypted assets

According to reports, the Beijing police, in conjunction with the Beijing branch of the State Administration of Foreign Exchange, have cracked a major Money Laundering case involving more than 2 billion yuan and violations of citizens' personal information. The criminal methods in this case are covert and diverse, covering a wide range, including 15 provinces and cities such as Beijing and Shanghai.

large-scale trafficking of citizens' personal information

The investigation found that the suspect Yan XX had set up multiple social groups abroad using instant messaging tools, selling personal information of Chinese citizens within these groups, including ID numbers, phone numbers, and home addresses. According to statistics, the total amount of personal information sold in these groups has reached over hundreds of millions of entries.

The investigation also found that a large number of buyers may be foreign institutions or individuals, leading to a significant amount of personal information of Chinese citizens flowing abroad. This information may be used for customized scams, inducing online gambling, and may even be utilized by foreign professional institutions to analyze China's economic and social development.

It is worth noting that public information has not disclosed how Yan obtained such a large amount of personal information of citizens, which indicates that there is still considerable room for improvement in China regarding the protection of citizens' personal information.

Cryptocurrency transactions trigger a large-scale Money Laundering case

To evade the multiple anti-money laundering checks faced by fiat currency transactions, Yan chose to only accept encryption asset transactions to resell citizens' personal information. This practice ultimately led to a larger-scale Money Laundering case.

Investigators found that Lin was the "contributor" behind Yan, helping him to convert the proceeds of crime into cash. The encryption asset accounts controlled by Lin have the following characteristics:

1. The source of funds is complex, involving various encryption asset trading activities;
2. Quick in and out of trades, with funds staying in the account for a short period of time;
3. The transactions are all in and out, and a large number of transaction records show that the input is approximately equal to the expenditure.

Based on these characteristics, the investigative agency determined that Lin was likely an underground bank, suspected of using encryption assets to commit Money Laundering crimes. Further investigation revealed that Lin was a Money Laundering associate controlled by an overseas individual, and along with five other accomplices, laundered approximately 2 billion yuan over the course of a year, with the gang profiting over 2 million yuan.

New Trends in Cryptocurrency Crimes and Regulatory Changes

According to information from the Supreme People's Procuratorate, the number of financial crime cases in 2023 has decreased, but remains at a high level. In the field of encryption assets, the number of crimes has reduced, but the amount involved has sharply increased, mainly due to the shift in types of crimes towards Money Laundering, illegal foreign exchange trading, and other areas.

Regulatory focus shifts to anti-Money Laundering and foreign exchange control

With the rapid development of the cryptocurrency asset market, it has also become a potential breeding ground for Money Laundering crimes. Therefore, the regulatory focus of Chinese regulatory authorities has shifted to anti-money laundering and foreign exchange control. Currently, economic and financial crimes involving large-scale cross-border capital settlement have become the key focus of strict investigation, mainly including Money Laundering, gambling-related crimes, illegal operation crimes (illegal buying and selling of foreign exchange, illegal outflow of funds), and fraud crimes (telecom fraud).

The tolerance for individual encryption asset transactions has increased.

The investigation process of this case shows that regulatory authorities have become more tolerant of individual behaviors such as "trading cryptocurrencies". Although investigators noticed that a large amount of Lin's cryptocurrency assets came from domestic citizens, no criminal cases targeting individuals related to this case have been found so far. This indicates that, despite having a wealth of information on OTC traders, the focus of regulatory agencies is not on individuals holding and trading cryptocurrencies.

Conclusion

The crackdown on large-scale Money Laundering of encryption assets and related upstream crimes is a global trend in the regulation of encryption assets. Although encryption assets are a convenient tool for cross-border capital flows, with the advancement of on-chain data analysis technology, the "anonymity" of encryption assets has almost disappeared. For money laundering methods similar to those in this case, tracing and evidence collection is merely a matter of time and technical costs for law enforcement agencies.