China continues its campaign to combat capital flight generated by its internal criminal networks, which are increasingly using Bitcoin-BTC and other digital currencies to move money out of the country, according to recent research.
Key points:
- Chinese money laundering networks continue to increasingly use Bitcoin and Tether-USDT to avoid strict restrictions on capital movements.
- The same networks currently offer their services to Western criminal groups, particularly in the fentanyl supply chain.
- Researchers warn that money laundering activities using digital currencies are quickly becoming a global phenomenon that is difficult for a single government to manage without international coordination.
A research paper published this month by Kathryn Westmore, a senior research fellow at the Royal Uniformed Services Institute (RUSI), claims that digital currencies have become a pillar of China’s secretive criminal financial system.
Chinese money laundering networks turn to cryptocurrencies to avoid restrictions on capital transfers
In his article, Westmore explained that Chinese money laundering organizations (CLMOs) regularly use digital assets as a channel to transfer illegally acquired capital, and said that “the activities of Chinese CLMOs based on digital currencies are growing, as they have become accustomed to transferring balances of virtual assets (such as Bitcoin) or stable currencies (such as Tether (USDT)) in exchange for their dirty money (earned through… criminal practices).
These digital assets serve as a tool to transfer individuals’ wealth across borders and avoid restrictions on capital transfers that hinder their exit from the country. The recent change comes amid a rise in crypto-related crimes. Investor losses exceeded $2.3 billion in 2025, while $4 billion was stolen from victims of trust fraud in 2024, according to the Chainalysis platform.
Westmore’s research added a new dimension to the picture; As it reveals the transformation of Chinese money laundering organizations into a financial intermediary necessary to launder the proceeds of Western criminal practices (including fentanyl supply chain entities), the report describes a method for converting proceeds from U.S. drug trafficking into Bitcoin or Tether balances, to be transferred to external accounts belonging to wealthy Chinese clients who seek covert channels to move their money outside the country.
THE NEW EPISODE IS LIVE. WE FOUND $500,000,000 IN CRYPTO PAYMENTS AND MONEY LAUNDERING. pic.twitter.com/p9NDjwaAYx
– Cafézilla (@coffeebreak_YT) June 9, 2023
The uses of digital currencies go beyond money laundering services; Many Chinese suppliers accept payment in Bitcoin and Tether for the raw chemicals needed to make fentanyl, transforming the digital asset into an infrastructure to settle commercial transactions of synthetic opioids, as confirmed by blockchain analytics firm Elliptic. He documented payments to Chinese chemical suppliers linked to global fentanyl distribution networks.
Westmore warns here that the problem is now beyond the capabilities of individual governments, given the depth of the links between digital assets and global money laundering networks.
European police uncover gang behind 49 million fake crypto accounts
In October, Europol dismantled a complex digital crime network accused of creating more than 49 million official online accounts, including fake accounts linked to major crypto platforms.
The operation, called “SIMCARTEL,” successfully exposed a network that leased cell phone SIM cards to bypass two-factor authentication, allowing criminals to mass-produce false identities and carry out large-scale financial fraud.
According to Europol: This network’s infrastructure made it possible to create accounts for a wide variety of online services, including shopping sites, digital banks and cryptocurrency trading platforms. These fraudulent accounts were used to launder illicit money and run fraudulent email and SMS campaigns targeting European users.
Cryptocurrencies are becoming a major tool within Chinese money laundering networks, according to a report that appeared first on Cryptonews Arabic.