China Warns Crypto Fuels Espionage and Money Laundering

China’s Ministry of State Security has issued a stark warning about cryptocurrency, linking it to money laundering, cyberattacks, and espionage. In an article published on 28 September, the ministry claimed that foreign intelligence agencies use crypto to transfer funds to recruits, falsely asserting that transactions are untraceable. The ministry debunked this notion, emphasizing that every crypto transaction is permanently recorded on a public ledger.

The warning also highlighted the risks of well-paid part-time jobs that pay in crypto, particularly if they involve activities like photographing sensitive areas or leaking internal documents. The ministry urged the public to report such suspicious approaches through its 12339 hotline. Additionally, the ministry noted that proceeds from telecom fraud, online gambling, and cross-border smuggling are often laundered through crypto to evade financial regulators.

The ministry reiterated that crypto anonymity is a myth, as transactions are logged on a blockchain and can be traced back to individuals through trading platforms and payment interfaces. The warning follows a broader crackdown on crypto, including a February notice from the People’s Bank of China and seven other agencies that reaffirmed the ban on crypto and extended it to tokenized real-world assets.

China has maintained a strict stance against cryptocurrency, banning initial coin offerings and domestic exchanges in 2017, and outlawing mining in 2021. The latest warning serves as a reminder that crypto trading remains illegal on the mainland, with authorities continuing to enforce the ban rigorously.