Security

Chinese authorities swoop on 380 suspected crypto and wire fraud groups in 1H 2021

According to data from China’s National Anti-Fraud Center, authorities identified and took action against more than 380 criminal groups allegedly engaged in shady activities such as running misleading promotions and virtual currency money-laundering in the first half of this year. 

Anti-Fraud Center officer Zhang Shuo said wire fraud had become the fastest-growing crime. From January to May, 114,000 cases were solved nationwide, and more than 14,000 criminal gangs faced punishment. Crypto-related scams and other fraud using high-end technologies were a key focus, according to Beijing Business Today. 

Crypto-scams are a worldwide problem. According to the Cryptocurrency Scam Report, published by fraud prevention company Bolster, more than 400,000 crypto-related scams were identified globally in 2020, up about 40% from 2019. 

In China, crypto scams have grown in recent years. In the past, such scams were limited to the crypto community. However, with the ubiquity of the internet and the spread of blockchain technology in China, scams have touched many people’s daily lives. 

The number of digital crime cases surpassed the number of offline scams as long as four years ago, according to a police officer from the Zhejiang Provincial Public Security Department who spoke at the World Blockchain Conference, a major blockchain event in China that took place last weekend in the southeastern city of Hangzhou.

As the Chinese central bank digital currency program was being widely tested around the nation, fraudsters took advantage of people’s familiarity with the concept of a digital yuan to sell their own crypto projects by appropriating the project’s identity, Xinhua News Agency reported. 

Given that blockchain technology is regarded as one of the core technologies needed to support China’s next wave of digital transformation, many government departments have adopted it to upgrade their services, unwittingly becoming targets for hackers.   

Shi Jintan, a blockchain safety think tank researcher, said at the same conference that for centralized organizations such as exchanges, advanced persistent threat attacks and on-chain attacks were the two biggest threats. He said APT attacks had targeted the SWIFT system used by banks, as well as governments and businesses. 

China has imposed strict regulations to crack down on crypto trading and crypto mining. In early July, the Beijing office of the People’s Bank of China published a notice warning that institutions in its jurisdiction were not allowed to provide marketing or information services related to cryptocurrencies. It warned investors that “they should not be involved in any virtual currency activities and beware of damage to personal property and interests.”

   

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