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- Crypto scams are drastically decreasing in China
- From 2019 to 2021, amid the crackdown on crypto firms, about $2.2 billion worth of Chinese digital assets have been sent to crypto scams and darknet
- Scam awareness and government crackdowns are found to be the reason behind the decrement in financial crimes
- Most of the Chinese fentanyl drug producers are using digital currency to carry out transactions
- Money laundering was also being disproportionately carried out in the country
Crypto scams are soaring as the industry is getting mainstream exposure. On the other hand, a recent report published by Chainalysis revealed the transfer of crypto funds from China’s cryptocurrency wallets to addresses linked with illegal activities. Such activities included scams and darknet operations between April 2019 and June 2021. The report estimated that more than $2.2 billion worth of virtual assets had been sent to scammers and the darknet. Indeed, the addresses received the funds from illegal sources. Notably, the scam-related illegal activities have made China a prominent player in cryptocurrency-related crime.
Chinese crypto scams rate has plunged
Since 2019, Chinalysis revealed that Chinese cryptocurrency addresses had been scammed with more than a couple of billion dollars. Scammers and darknet operations have received the funds with illegal means, making the country a prominent player in crypto scams. Notably, the report analyzed the activities amid the authority’s crackdown on the industry.
However, it has been observed that the transaction volume with illegal activities has decreased over the two years. Indeed, the fall was drastic in such a period in terms of absolute value and relative to other nations globally.
How did the illicit transaction volume plunge?
According to the report, the biggest reason behind the decline is the absence of large-scale Ponzi schemes. Such a scheme includes the 2019 scam that involved the Chinese origin cryptocurrency wallet and exchange PlusToken. Users and clients of the wallet and trading platform lost about $3 billion to $4 billion from the scam.
According to Gurvais Grigg, Chainalysis’s global public sector chief technology officer, the decline came following the awareness raised by PlusToken. Moreover, it is expected that crackdowns in several country provinces have also played a major role in helping decrease the financial crypto crime rate.
Drugs in exchange for digital currency
The report by Chainalysis also described how China is a potent narcotic pain medication. According to the analysis firm, China is the hub of the global fentanyl trade. Notably, most drug producers are using digital currency to carry out transactions.
On the other hand, money laundering has been noted as another form of cryptocurrency-related crime besides crypto scams. Indeed, such activities were also being disproportionately carried out in the country. Most of such crimes involved mainstream digital assets exchange platforms and some over-the-counter (OTC) desks.
Is China taking any actions for financial crimes?
According to the report, the Chinese government is taking severe actions against the region’s financial crimes. Indeed, the authorities are taking action against businesses and individuals facilitating such activities. According to Zhao Dong, the founder of several Chinese OTC businesses, pleaded guilty in May to financial crimes after being arrested last year.
