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Chinese Cryptocurrency Tied To More Than $2B In Crime, Scams

Chinese cryptocurrency is the latest involved in a rash of illicit activity involving $2.2 billion in digital payment tokens used in scams and dark internet operations over a two-year period. Chinese cryptocurrency addresses sent and received funds for illegal activity from April 2019 through June 2021, according to a Reuters report.

Cryptocurrency schemes have become more widespread in recent years. In July, British police impounded $249 million in cryptocurrency that had been linked to a money-laundering operation. That seizure was said to be the largest in the country’s history. Action Fraud, England’s national fraud-reporting operation, recorded 5,581 crypto-related crimes in 2020, a 57 percent increase over 2019. Losses associated with the scams totaled $156 million.

Read more: UK Cops Seize $249M in Crypto Crackdown

Scams tied to cryptocurrency, including money laundering, fraud and other crimes, totaled $4.3 billion in 2019, a higher amount than the previous two years combined, PYMNTS reported previously. Approximately $2.8 billion in laundered funds also flowed through cryptocurrency exchanges in 2019, a nearly three-fold spike from $1 billion in 2018.

Since 2011, fraudsters have stolen more than $7.6 billion worth of cryptocurrencies, with $2.8 billion swiped through security breaches and $4.8 billion taken through cryptocurrency user scams. In 2020, there were 400,000 separate cryptocurrency scams, up 40 percent year over year.

The largest single cryptocurrency theft to date happened in 2018, when $534.8 million in NEM coins were pilfered from Coincheck. The theft impacted more than 260,000 Coincheck customers.

See more: How Cryptocurrency Exchanges’ Onboarding Systems Can Weed Out Fraudsters

In terms of cryptocurrency scams originating in China, Reuters reported that the country’s transaction volume with illegal addresses has dropped dramatically over the two-year timeframe as compared to value and as it relates to other countries.

The report named Chinese trafficking of the narcotic fentanyl, as well as money laundering, as catalysts for some of the uptick in cryptocurrency scams.

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