In a bid to combat the surge in cybercrimes involving blockchain and metaverse projects, the Supreme People’s Procuratorate (SPP) of China, the nation's highest prosecutorial authority, has intensified efforts to crack down on illicit activities in the digital asset space. Ge Xiaoyan, deputy prosecutor-general of the SPP, highlighted the alarming rise in online fraud, cyber violence, and personal information infringement. The proliferation of cryptocurrencies for money laundering has made tracking illicit wealth increasingly challenging. This comprehensive overview delves into the proactive measures taken by the SPP to address the growing concerns surrounding blockchain-related crimes and the implications for the digital asset landscape in China.
China’s National Prosecution Authority's Vigilance The SPP reported a significant surge in cybercrimes committed on blockchains and within the metaverse. Criminals are finding novel ways to exploit cryptocurrencies for illegal activities, with telecommunication fraud charges alone increasing by 64 percent year-on-year. Moreover, traditional crimes such as gambling, theft, pyramid schemes, and counterfeiting have permeated cyberspace, with charges related to internet theft rising by nearly 23% and those linked to online counterfeiting and sales of inferior goods surging by almost 86%.
The prosecutorial authorities have taken decisive action, pressing charges against over 280,000 individuals in cybercrime cases between January and November. This marked a 36% year-on-year increase, reflecting 19% of all criminal offenses, as emphasized by Zhang Xiaojin, the director of the Fourth Procuratorate of the SPP. Additionally, concerns were raised about investment scams in the local crypto economy, urging citizens and digital asset participants to remain vigilant amid the growing cyber threats.
Divergent Approaches in China: Mainland vs. Hong Kong Notably, China's efforts to combat digital asset-related crimes diverge from the approach adopted in Hong Kong. The special administrative region of China has implemented crypto-friendly regulations to standardize its digital asset ecosystem and protect investors without stifling innovation. This divergence underscores the varied regulatory approaches within the broader Chinese crypto landscape, shedding light on the contrasting strategies employed to navigate the intersection of digital assets and criminal activities.
Regulatory Framework and Enforcement Efforts The People’s Bank of China (PBoC) has underscored the imperative of international collaboration in regulating cryptocurrency assets, emphasizing the need for cohesive regulatory efforts across different countries. The PBoC has proactively addressed cryptocurrency regulation and decentralized finance in its latest financial stability report, stressing the importance of coordinated regulatory frameworks to manage the crypto industry. Additionally, in 2021, the PBoC announced measures to counter the adoption of cryptocurrencies in mainland China, advocating for enhanced inter-departmental coordination to clamp down on crypto-related activities within the country.
A Multipronged Approach to Combating Crime ZachXBT, a prominent figure in the blockchain investigation domain, recently garnered attention for successfully recovering the majority of proceeds from a stolen DeGods NFT, showcasing the effectiveness of investigative efforts in combatting crypto-related crimes. ZachXBT's rigorous approach and notable successes underscore the multi-faceted nature of combating digital asset crimes, portraying a comprehensive ecosystem where various stakeholders play pivotal roles in addressing illicit activities within the crypto space. His pro bono work has extended to assisting individuals and national authorities in unraveling complex crypto crimes, exemplifying the collaborative approach required to mitigate the impact of nefarious activities in the crypto sphere.
Conclusion As China’s prosecutorial authorities intensify efforts to combat blockchain-related cybercrimes, the evolving regulatory landscape and multi-stakeholder efforts serve as crucial components in safeguarding the digital asset ecosystem. The proactive measures taken by the SPP and the collaborative approach exemplified by figures like ZachXBT underline the imperative of cohesive regulatory frameworks and collaborative investigative efforts to effectively thwart cybercrimes, thereby promoting a secure and resilient digital asset ecosystem for stakeholders across the crypto industry.
(AMAKA NWAOKOCHA, COINTELEGRAPH, 2024)