China Targets Overseas Telecom Fraud Leveraging Blockchain, Crypto, Metaverse, and AI

In a recent meeting, China’s Central Political and Legal Affairs Commission has emphasized the need for a systematic, legal, and source-based approach to combat overseas telecom network fraud and related criminal activities. The announcement was made on August 6, 2023, as reported by the Economic Daily.

The commission pointed out that fraud groups have been increasingly utilizing new technologies such as blockchain, metaverse, virtual currency, and AI intelligence to update their criminal tools, making them more concealed and deceptive.

Overseas Telecom Fraud: A Growing Concern

In recent years, overseas telecom network fraud groups have been luring ordinary people into fraudulent activities under the guise of “high-paying job recruitment.” These activities have led to violent detention, human trafficking, and a series of dark industrial chains, causing significant harm to the safety of people’s lives and property.

The diversity of fraudulent methods, the ruthlessness of coercion, and the enormity of the defrauded amounts have led to public outrage. The commission stressed the need to “resolutely maintain the people’s vital interests, firmly uphold social decency, and firmly uphold the authority of the rule of law.”

Organized Crime Features

The overseas telecom network fraud groups are characterized by tight organization, clear division of labor, multi-industry support, industrial distribution, group operation, and refined division of labor. This has necessitated strengthening international law enforcement cooperation and joint efforts with relevant countries to eradicate fraud dens, rescue trapped individuals, and bring the criminal forces and their organizers to justice.

Utilizing New Technologies for Fraud

The commission noted that fraud groups are leveraging blockchain, metaverse, virtual currency, and AI intelligence to constantly update their criminal tools, making them more concealed and confusing. This requires coordination between public security, finance, telecommunications, and internet departments to apply advanced technological means and fulfill regulatory responsibilities.

Efforts are being made to compress online crime space from offline, organize concentrated investigations and disposals of high-risk telephone cards and bank cards related to fraud, clean up associated internet accounts, and smooth network reporting channels. Thorough investigations are being conducted into domestic criminal gangs colluding with overseas entities, with full efforts to cut off smuggling channels.

There are increasing crimes related to crypto, blockchain, NFT and Metaverse in China.

On July 18, 2023, Chinese authorities in Qingshui County, Shanxi Province, successfully cracked a money laundering case involving the cryptocurrency Tether (USDT). The operation led to the arrest of 21 suspects and the confiscation of cash and USDT worth over 1 million yuan. 

The investigation revealed a complex network of individuals across four provinces and six cities, using USDT to launder money for cybercriminals. The criminal group helped settle payments of over 54.8 million USDT, equivalent to about 380 million yuan.

In December 2022 in Inner Mongolia, 63 suspects were arrested for laundering money with USDT, amounting to 12 billion yuan.

Public Awareness and Education

The public security and judicial departments are urged to further strengthen publicity and education to continuously enhance people’s awareness and ability to identify and prevent telecom network fraud. Special attention is being paid to young people entering society, guiding them to be vigilant against opportunistic psychology and herd mentality, and to seek a solid footing in serving society.

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