A $20 Billion Crypto Scam Market Faces a New Government Crackdown
Black online in Chinese language Marketplaces have become one of the largest drivers of cybercrime in history, processing tens of billions of dollars in illicit financing each year. Facilitating the trade in stolen data, money laundering services and sometimes even electrified chains, these underground markets have fueled fraud and human trafficking operations around the world. Today, U.K. officials dealt a potentially punitive blow to a $20 billion cryptocurrency market.
On Thursday, the British Foreign, Commonwealth and Development Office, also known as the Foreign Office, revealed financial sanctions against online marketplace Xinbi Guarantie, which will likely limit its operations. The online bazaar, which operated through channels and accounts on messaging platform Telegram, has already been linked to billions of cryptocurrency transactions and has proven difficult to disrupt.
The sanctions against Xinbi came as British authorities also penalized several individuals allegedly linked to operating fraudulent industrial-scale resorts in Cambodia, including the 20,000-person Park No. 8 resort. The British government has also seized properties in London, including a £9 million penthouse, linked to those sanctioned. Foreign Minister Stephen Doughty said in a statement that the sanctions “send a clear message” that those who run fraudulent schemes will face consequences. This action follows a broad wave of sanctions imposed by the United States and the United Kingdom against fraudulent operations linked to Cambodia in October.
Over the past decade, hundreds of thousands of human trafficking victims have been forced to work in compounds across Cambodia and Southeast Asia, running online cryptocurrency investments and romance scams day and night. This multibillion-dollar scam industry, which often has ties to Chinese organized crime groups, has thrived and been supported by secondary services and cryptocurrency marketplaces that sell the tools and technical infrastructure needed to carry out these scams. These include Xinbi, which has become one of the largest markets since the Huione Group was sanctioned last year.
“Xinbi is or has been involved in financially profiting from or obtaining advantage from human rights violations,” the UK sanctions register claims, referring to brutal treatment and torture that has taken place at some fraud complexes in the region. “Xinbi enabled and profited from the operation of fraud centers in Southeast Asia. »
“Sanctions will make it more difficult for Xinbi, its traders and users to spend or trade cryptocurrencies that have passed through the market,” Tom Robinson, chief scientist and co-founder of cryptocurrency tracking company Elliptic, told WIRED. Last year, an analysis by Elliptic found that the Xinbi Guarantie platform has facilitated at least $8.4 billion in transactions since 2022. The “vast majority” of that money, Robinson said at the time, was likely money stolen from online scam victims. However, the platform’s other activity was also selling the technology, personal data and money laundering services needed for online scams.
Following WIRED’s report last May, Telegram removed channels and accounts linked to both Huione Marketplace and Xinbi. Since then, however, Xinbi has rebuilt its presence on Telegram and also decided to diversify its infrastructure to be more resilient to takedown actions.
“Xinbi was able to recover very effectively from Telegram’s action against him. He simply created new Telegram channels and continued his activity,” Robinson told WIRED. “In fact, it has experienced substantial growth, increasing its market share following the closure of Huione Garantie and other similar markets.” Robinson now estimates that for all of Xinbi, including the traders operating there and its own infrastructure, the amount of transactions has reached $19.7 billion.
