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

In recent years, with the rapid expansion of the cryptocurrency asset market and criminals' deep understanding of regulatory rules in various countries, the methods of using cryptocurrency assets for Money Laundering have also been continuously upgraded. These new methods include combining fiat currency with cryptocurrency assets for Money Laundering, mismatching cryptocurrency assets with physical assets for more covert Money Laundering, among others. This not only impacts the financial order of various countries but also leads to practical issues such as foreign exchange outflow and a surge in new types of online crimes.

Recently, a major case involving the use of encryption assets to launder 2 billion yuan and sell personal information of Chinese citizens to foreign institutions has been exposed. This case reveals the latest trends in crimes related to encryption assets in our country.

A Special Case of "Case within a Case" Involving Encryption Assets

According to reports, the Beijing police, in conjunction with the Beijing branch of the State Administration of Foreign Exchange, successfully uncovered a major case of Money Laundering and infringement of personal information involving more than 2 billion yuan. The criminal methods used by the suspects were extremely concealed and diversified, covering a wide range, including 15 provinces and cities such as Beijing and Shanghai.

Large-scale trafficking of personal information of our citizens

Investigations show that the suspect Yan XX has established multiple social groups abroad using instant messaging tools, selling personal information of Chinese citizens within these groups. This information mainly includes sensitive data that can be specifically tied to individuals, such as ID card numbers, phone numbers, and home addresses. According to statistics, the total number of personal information sold across multiple groups has reached over one hundred million entries.

Further investigation reveals that many buyers may be overseas institutions or individuals, resulting in a significant amount of personal information of our citizens flowing abroad. This information may be used for customized fraud, inducing online gambling, and may even be utilized by foreign professional agencies to analyze our country's economic and social development status, posing a potential threat to national security.

It is worth noting that public information has not disclosed how Yan obtained such a large amount of citizens' personal information. This indicates that there is still significant room for improvement in the protection of citizens' personal information in our country.

cryptocurrency trading exposes a 2 billion yuan Money Laundering case

To avoid multiple Money Laundering checks faced in fiat currency transactions, Yan chose to only accept transactions in encryption assets to resell citizens' personal information. This choice ultimately led investigators to discover the Money Laundering network behind it, with a key figure being Lin.

Investigators found the following characteristics by analyzing the flow of funds in the encryption asset accounts controlled by Lin.

1. The source of funds is complex, involving various encryption asset trading activities;
2. Fast in and out of trades, with funds staying in the account for a short time;
3. Transactions are fully completed in and out, with a large number of trading records indicating that the input is approximately equal to the output.

Based on these characteristics, the investigation agency concluded that Lin is not an ordinary cryptocurrency investor, but rather likely a member of an underground bank, suspected of using encrypted assets for Money Laundering crimes. Further investigation revealed that Lin is a downstream participant in a Money Laundering network controlled by foreign individuals. Over the course of a year, Lin and his five accomplices laundered approximately 2 billion yuan, profiting more than 2 million yuan.

New Trends in Cryptocurrency Crime and Regulatory Changes

According to data from the Supreme People's Procuratorate, the number of financial crime cases in my country decreased in 2023, but it remains at a high level. In the field of encryption assets, the number of crimes has significantly decreased, but the amount involved has sharply increased. This is mainly because the types of crimes involving encryption assets are shifting towards Money Laundering, illegal foreign exchange trading, and other areas.

The regulatory focus has shifted to anti-Money Laundering and foreign exchange control.

With the prosperity of the encryption asset market, countries have made varying degrees of progress in exploring compliance regulations. However, the expansion of the market size has also increased the risk of it becoming a Money Laundering hotbed. Therefore, our country's regulatory agencies have gradually shifted their focus to primarily aim at anti-money laundering and foreign exchange control.

Currently, economic and financial crimes related to large-scale cross-border fund settlements have become key targets for crackdown, mainly including Money Laundering, gambling-related crimes, illegal business operations (illegal foreign exchange trading, illegal outbound funds), and telecommunications fraud.

has a more tolerant attitude towards personal encryption cryptocurrency transactions.

From the investigation process of the above case, it can be seen that regulatory agencies have shown an increased tolerance for individuals engaging in "speculating on cryptocurrencies" and other behaviors. Although investigators found a large number of domestic citizens participating in encryption asset trading, no further action was taken against these ordinary traders.

This indicates that, although law enforcement agencies have obtained a large amount of information about OTC (over-the-counter) participants, the current focus of the crackdown is not on individuals holding and trading encryption assets. Of course, further penalties in the future cannot be ruled out, but overall, regulatory authorities have shown an increased tolerance for individual encryption asset activities.

Conclusion

A severe crackdown on large-scale Money Laundering of encrypted assets and related upstream crimes is a global trend. With the advancement of on-chain data analysis technology, the "anonymity" of encrypted assets is almost non-existent. For money laundering methods like those in this case, tracing and gathering evidence is merely a matter of time and technical costs for law enforcement agencies.

Cryptographic assets have indeed facilitated cross-border capital flows, but their use also comes with significant risks. Whether individuals or institutions, they should strictly adhere to relevant laws and regulations when participating in cryptographic asset transactions to avoid crossing legal red lines.