The Beijing police, in collaboration with the Beijing Branch of the State Administration of Foreign Exchange, has uncovered a series of cases involving the illegal sale of citizen information using crypto.

The investigation spanned 15 provinces and cities, including Beijing, Shanghai, and Zhejiang, and discovered crypto transactions exceeding 2 billion yuan ($282 million), according to a report from Chinese media outlet CCTV. 

The report said that the case stands out due to its concealed and diverse criminal methods, constituting a complex “serial case” that encompasses activities ranging from dark web transactions to illegal foreign exchange dealings.

Bad Actors Use Cryptocurency to Sell Personal Information

The Beijing police revealed that bad actors were employing the dark web and virtual currencies to engage in the illicit sale of various private information belonging to Chinese citizens. 

Liang Fei, a case handler from the Economic Investigation Corps of the Beijing Municipal Public Security Bureau, told CCTV that certain individuals had formed multiple groups using overseas chat software, openly selling citizens’ personal information within these groups. 

This information included ID numbers, mobile phone numbers, home addresses, and more.

These information-selling groups boasted hundreds of members, with hundreds of millions of citizens’ personal data being traded within them. 

The Beijing police in China recently uncovered a series of cases involving the illegal sale of citizen information using cryptocurrency, involving more than 282 million US dollars, and more than ten virtual wallets were used for illegal transactions.https://t.co/ycbnObyP8o

— Wu Blockchain (@WuBlockchain) April 6, 2024

Transactions were strictly limited to virtual currencies, and the police’s preliminary assessment suggests that buyers likely included overseas institutions. 

The potential consequences of large-scale outflow of Chinese citizens’ private data to criminals abroad are grave, as this information could be exploited for “precise” fraud targeting ordinary individuals. 

For instance, certain online gambling platforms have targeted high-net-worth groups by sending links to their mobile phones.

Police Busts Suspect Conducting Transactions in Crypto 

During the investigation, the police discovered that a suspect named Yan Moumou conducted all transactions involving the sale of citizen information using virtual currencies. 

The sheer magnitude of cash exchanged for virtual currency caught the attention of the authorities. 

Lu Nan, a case handler from the Economic Crime Investigation Detachment of the Haidian Branch of the Beijing Municipal Public Security Bureau, revealed that the source of Yan’s funds was remarkably complex, comprising multiple origins. 

This distinguished him from ordinary currency speculators. 

Given the rapid movement of virtual currencies in and out of his possession, it was inferred that Yan was not a speculator but rather a facilitator of money laundering for underground banks.

As the investigation progressed, the police discovered that Lin, who assisted Yan with fund exchanges, had been involved in illegal foreign exchange transactions using virtual currencies for an extended period. 

However, further investigation revealed that Lin Moumou was not the true mastermind behind the criminal operation. 

There was another higher-level individual orchestrating the scheme, and Lin and the higher-up had no prior association.

Last year, authorities in China‘s Shanxi Province arrested 21 individuals allegedly involved in a major Tether (USDT) money laundering scheme. 

The scheme, estimated to have generated over $54 million, utilized the US dollar-backed stablecoin USDT to launder money.

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