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Cryptocurrency and Telegram Fueling Drug Crimes, Emerging Trends in China

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Cryptocurrency is favored more for transactions in peddling narcotics in China, says the police.

During the late hours of the night, an unfamiliar dark figure stealthily infiltrated the corridor of a residential community. Moving cautiously, the shadow extended its hand, feeling around until it found a concealed spot to secure a plastic package containing both “stamps” and marijuana products using a magnet. Approximately a month later, another shadow meticulously retrieved the plastic bag. Thus, in a realm of secrecy where nobody was aware, an illicit drug transaction was clandestinely concluded.

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Cryptocurrency and Telegram Fueling Drug Crimes, Emerging Trends in China 2

Drug addicts and dealers established communication through foreign social platforms. Dealers strategically concealed their merchandise beforehand, while addicts autonomously located and retrieved the goods based on provided instructions. Subsequently, transactions were conducted using cryptocurrency.

On the eve of “6.26 International Anti-Drug Day,” the Shanghai police disclosed the successful dismantling of a criminal gang involved in the sale of new drugs, as well as the cultivation, processing, and distribution of marijuana.

The underlying factor, in this case, is the prevalence of internet-based drug trafficking, where no direct contact is involved throughout the entire process. This has emerged as the primary modus operandi in the contemporary drug trade and presents a crucial challenge that needs to be addressed in drug control efforts.

Dark Web and Cryptocurrency Payments

The discovery of this case highlights the importance of public vigilance towards emerging methods of drug-related crimes, such as online drug trafficking and “buried bag” transactions.

In recent years, there has been a noticeable surge in illicit activities involving the production and distribution of drugs through online channels. This underground industry is rapidly developing, utilizing overseas social software for communication, engaging in “buying” transactions and making payments through cryptocurrency. As a result, a comprehensive network-based drug trade ecosystem is taking form.

Regarding the prevailing trends, overseas social platforms and the ‘dark web’ are assuming an increasingly significant role in various aspects of drug-related offenses. They have transformed into breeding grounds for the proliferation and expansion of drug crimes. Section Chief Li from the Anti-Drug Division of Shanghai Public Security Bureau emphasized that law enforcement agencies are leveraging advanced network investigation technologies, devising novel collaborative models among multiple police forces, conducting research, and exploring technical and tactical strategies to combat drug-related crimes on the internet. Their goal is to continually enhance the effectiveness of countermeasures against online drug crimes.

Within the realm of drug fund circulation, certain drug dealers employ multiple intermediary steps to conceal transaction details, thereby both obscuring the truth of their dealings and presenting challenges for law enforcement agencies in tracing the flow of drug funds. This case exemplifies the emerging trend of utilizing cryptocurrency as a means to facilitate drug fund payments, further complicating the tracking process for the police.

China’s National Television Broadcasts Crypto: Potential Bullish Trigger For Market Recovery?

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China Central Television (CCTV), the national television broadcaster of the Asian giant, made headlines by featuring crypto in its recent broadcast. The announcement, revealed by Changpeng ‘CZ’ Zhao, CEO of Binance, has sparked excitement within the industry, considering the historical significance of such broadcasts in triggering bull runs.

CZ emphasized the potential impact of this bullish event on the cryptocurrency ecosystem’s current state while clarifying that past performance does not guarantee future outcomes. The ecosystem may undergo positive changes if the event takes place. Its potential benefits are catalyzing market recovery and breathing new life into a market that has recently experienced volatility.

China has a complex relationship with digital currencies, with a rich history of involvement in their evolution. Over the past decade, the country has oscillated between support and skepticism, culminating in a ban on all crypto transactions in 2021.

This ban sent shockwaves throughout the crypto ecosystem, with the People’s Bank of China (PBoC) forbidding financial institutions from engaging in any digital currency-related activities. Additionally, it prompted the departure of Bitcoin miners from the country, leading to a significant drop in the global BTC mining hashrate.

Crypto World Awaits China’s Broadcast Impact

Since news of the broadcast spread, commentators have offered intriguing speculations about its implications. Many believe that it signals China’s renewed interest in embracing the technology under a regulated environment, suggesting the possibility of final regulations for the industry.

Given China’s enormous market potential and influence on the ecosystem, a revival of its interest in cryptocurrencies could have far-reaching consequences for all stakeholders involved. The broadcast by CCTV may be seen as an important milestone in this evolving relationship, potentially paving the way for a more controlled and regulated approach to digital currencies in China.

China’s national television broadcaster, China Central Television (CCTV), has focused on crypto and got people talking. The broadcast triggered interest and discussion. Changpeng ‘CZ’ Zhao thrilled the industry, given the historical relevance of such broadcasts in initiating bullish movements.

CZ highlighted how this festive event could potentially impact the current state of the crypto ecosystem. He confirmed that future results cannot be assured. If the event occurs, the ecosystem might experience positive changes.

Meanwhile, once a prominent crypto hub, Hong Kong is trying to regain its status and ease regulations for retail investors to trade like Bitcoin and Ethereum (ETH). This move is viewed as a subtle experiment for mainland China to gauge whether it can effectively regulate crypto service providers.

Hong Kong’s recent actions to reposition itself as a crypto-friendly jurisdiction are closely watched as a potential model for mainland China. Hong Kong aims to attract retail investors and stimulate trading by relaxing regulations. The success of this experiment could provide valuable insights for China in managing the affairs of crypto service providers through thoughtful and effective regulations

Related Reading: | Bitcoin Sell-Side Risk Ratio Approaching All-Time Lows, Signaling Potential Volatility

Crypto: Unveiling the Dark Trade – Fentanyl, China, & Crypto’s Sinister Connection

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In a groundbreaking investigation where crypto assets play a significant role in illicit activities, Elliptic researchers have uncovered a disturbing trend in the fentanyl precursor trade, with more than 90 China-based companies offering services to supply these dangerous chemicals. 

The findings shed light on the thriving global fentanyl crisis and the significant role played by cryptocurrency in facilitating illegal transactions.

What’s more alarming is that 90% of these companies readily accepted cryptocurrency payments, predominantly in Bitcoin and USDT, raising concerns about the exploitation of digital currencies in illicit activities.

The researchers discovered that many of these Chinese companies had also shipped the same precursors to Mexico, indicating an international network involved in the illicit drug trade. 

Fentanyl Epidemic Fueled By Cheaper Production & Crypto Profits

Shockingly, despite China’s ban on fentanyl since 2019, several businesses were even willing to supply fentanyl itself, emphasizing the magnitude of the issue at hand.

Through comprehensive blockchain analysis, Elliptic unveiled that the cryptocurrency wallets associated with these companies had received over $27 million in payments. 

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The number of transactions had witnessed a staggering 450% increase year-on-year. To put this into perspective, this amount of funding could produce fentanyl pills with a street value of approximately $54 billion.

One striking discovery was that a known fentanyl trafficker had made significant Bitcoin payments to one of these Chinese suppliers. This revelation implicates the involvement of established criminal networks in perpetuating the fentanyl crisis. 

Fentanyl, being cheaper to produce than heroin and 50 times more potent, has become the leading cause of death for those aged 18-45 in the United States.

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While China was historically the main source of illicit fentanyl, the 2019 ban led Mexican drug cartels to fill the void. They now manufacture fentanyl using precursors imported from China, exacerbating the epidemic within the United States. 

In response, the US government has increasingly focused on disrupting the financial activities of fentanyl traffickers and their supply networks.

In April 2023, the US Department of the Treasury imposed sanctions on individuals and businesses in China involved in supplying precursor chemicals to Mexican drug cartels. Cryptocurrency wallets used by these entities were also listed, marking a significant step in cracking down on the illegal drug trade.

Elliptic has identified more than 90 Chinese chemical companies involved in the fentanyl precursor trade, with 90% accepting cryptocurrency payments. Most of the payments were made in Bitcoin, followed by the US dollar stablecoin Tether.

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Source Elliptic: Some of the Bitcoin payments from Peijnenburg to the China-based chemical supplier.

By flagging hundreds of crypto addresses associated with this activity, Elliptic aims to disrupt the fentanyl trade and prevent cryptocurrencies from being exploited in such deadly ventures. 

The researchers have also notified the exchanges used by these companies, highlighting the importance of monitoring gateways into and out of crypto assets to combat illicit activities effectively.

As fentanyl-related deaths continue to rise, it is evident that urgent and concerted efforts are necessary to tackle this crisis. 

Nevertheless, by targeting the financial infrastructure supporting the fentanyl trade, authorities and blockchain analytics companies like Elliptic aim to stem the flow of these deadly drugs and protect vulnerable individuals from its devastating consequences.

Related Reading | Crypto Defendants Dispute SEC’s Power in $18M Fraud Lawsuit 

TRON DAO Eyes Expansion In China?

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TRON team is reportedly jubilant over China’s apparent shift in stance towards the crypto sector. Justin Sun, founder of the blockchain shared a post recently where he cited China loosening its tight grip over crypto. He wrote,

China has taken a big step towards cryptocurrency regulation with the implementation of a tax on crypto transactions. The tax on crypto transactions is a clear indication that the Chinese government views cryptocurrencies as a legitimate form of wealth and wants to ensure its proper taxation.

Sun’s tweet came in response to tech journalist Colin Wu’s report on Jan. 25. In it, Wu revealed that Chinese tax authorities were investigating the nation’s ‘crypto whales’ revenue in order to tax their income.

Wu asserted that he had information from an unnamed whale that a local tax office had been in touch with the latter since early 2022, requesting an audit of its personal income tax. There are numerous individuals and a thorough list of the whales that have undergone inspection.

Wu also revealed that the audit process is still underway and that the tax inspectors are looking to apply the basic Chinese income tax rate to their earnings.

“The tax rate of property transfer income in personal income tax is 20% of personal profit/income, in the above specific cases, it should be 20% of the income from the fund.”

This, according to Sun, is an encouraging sign as China has imposed a ban on all kinds of cryptocurrencies since 2021.

TRON DAO has not made any official announcements

The TRON founder also stated that this new approach by tax authorities would boost cryptocurrency adoption in China.

As per him, “it provides a clear regulatory framework for individuals and businesses,” hoping “that the government will further regulate the crypto industry, providing further legitimacy and stability.”

Additionally, Sun emphasized TRON and Huobi’s “significant contributions” to “the growth and development of blockchain technology in China.”

As of now, TRON has not yet made any official announcements about its aspirations for China. However, the fact that it did so in response to China’s cryptocurrency policy shift reflects its desire to venture into a territory known for its anti-crypto stance.

Still, one can treat all of TRON’s potential interests in China within the spectrum of speculation.

Nearly 12,000 Bitcoin and crypto akin Weibo, Baidu accounts revoked by China regulator

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It is well known that China has ruthlessly destroyed major Bitcoin mining powerhouses and implemented a comprehensive ban on the industry.

China emerged as one of the first nations to embrace the business, although the majority of the world’s population knew very little about the crypto-verse. Now that every country seems to be moving into the sector, China decided to outlaw all things cryptocurrency.

Despite this, a number of Chinese locals persisted in expressing interest in the market. But it was obvious that China wanted to minimize all things crypto-related. As a result, the Cyberspace Administration of China decided the decision to delete nearly 12,000 social media profiles associated with cryptocurrencies.

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Source: TWJ

The Chinese government has made a lot of noise about its position in the sector. The bear market reinforced this idea as Bitcoin fell below the $20K barrier.

But even before the apex of the bear market, China’s National Cyberspace Administration had begun to take safeguards. The regulator then addressed false information that was being spread on social media to promote cryptocurrency.

It was revealed that the same reason led to the closure of over 12,000 Weibo and Baidu accounts. Additionally, more than 51,000 pieces of illicit information were removed. This featured material promoted “Easy money-making with Bitcoin investments.”

Additionally, 105 of the 500 or so websites that were examined were taken down. According to reports, these websites produce courses on cross-border currency speculation, information on crypto mining, and endorsements of cryptocurrencies.

Given China’s opposition to Bitcoin, the most recent report is not shocking. It is likely that the Chinese government will keep its ban on all cryptocurrencies in the area.

Is Chinese Bitcoin activity still going strong?

Several stories of underground mining in the nation have appeared despite the ban. It appears that there is still some BTC-related activity in the area.

According to local reports, due to legislative ambiguity and recurrent zero-Covid lockdowns in China, some Web3 firms with roots within the country are in the process of moving to Singapore.

However, not all Chinese Web3 companies want to leave. Building blockchain infrastructure businesses are probably going to stay, as Beijing has expressed support for such ventures.

Ripple Partners up With QNB and China Bank To Deploy Remittance Services

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A direct remittance service has been introduced by Ripple partner QNB for fund transfer from Qatar to the Philippines, marking a historic development.

It now holds the distinction of being Qatar’s first bank to provide the service. To provide this service, QNB will connect with China Bank, one of the leading private banks in the Philippines, using Ripple’s financial technology, “RippleNet.”

Ripple and QNB service focuses on easy remittance

With the new service, the bank hopes to provide its customers with a simple method for sending money abroad as well as a speedy and improved cross-border money transfer choice. 

The service will let users immediately transmit payments up to PHP50,000 to any bank in the Philippines. It primarily serves Filipinos living in Qatar.

“QNB is our biggest partner in the MENA region and we are delighted to continuously strengthen this partnership on RippleNet to additional countries,” says Navin Gupta, South Asia, and MENA Ripple, MD.

Over the weekend, the on-chain analytics company Santiment reported: “Recently, XRP has been leading the #altcoin pack, and over the past week, some significant milestones have been reached. 

This week, there have also been many sizable active address increases that have fired off, as well as sizable dormant token transfers.”

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Ripple Partners up With QNB and China Bank To Deploy Remittance Services 8

The Court has entered an Order establishing July 28, 2022, as the deadline, whereby any non-parties should progress to seal portions of the Daubert Motions or else revoke objections to the Court’s final decision on the Parties’ sealing applications, according to the most recent updates on the Ripple lawsuit provided by defense attorney James K. Filan.

The SEC’s petition to submit a 10-page reply brief in conjunction with its objection to Judge Netburn’s decision regarding the Hinman Speech materials was allowed, but its move to issue a 30-page opening brief was refused (limited to 20 pages). 

The SEC also filed a Motion to Seal in relation to the “Daubert Motions” that were submitted on July 12 by the Ripple Defendants and the SEC.

Bitcoin bears scare China’s crypto market

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Numerous predictions about Bitcoin [BTC] have been made possible by the start of the bear market. A few people appear to be certain that this bear market is the end of the king currency, while others seem to think that this setback is simply a catalyst for a potential bubble. Several nations proceeded to implement market restrictions as these forecasts poured in, but one country persevered in its animosity toward bitcoin.

The history of the world’s largest cryptocurrency in China is noteworthy. China at first became a BTC hotspot. The nation provided the most well-known crypto platforms, and for the longest time, it saw the biggest level of crypto activity. The industry’s degree of decentralization, meanwhile, did not sit well with the Chinese government. As a result, the nation later said goodbye to all things cryptocurrency. China still records activity in mining and trading despite this.

As a result of the market’s decline, the Chinese government continued to terrorize its populace by claiming that the world’s largest cryptocurrency would soon reach zero. According to a recent article from the news portal for the Chinese people, Economic Daily, “Bitcoin was nothing more than a string of digital codes.” Users were informed by the site that purchasing low and selling high were the primary methods for generating returns. The newspaper further stated,

“In the future, once investors’ confidence collapses or when sovereign countries declare Bitcoin illegal, it will return to its original value, which is utterly worthless.”

Saylor’s lifeboat- Bitcoin

Michael Saylor of Microstrategy has frequently stated his support for Bitcoin. Saylor has been a well-known BTC advocate, holding onto his money and encouraging others to buy additional BTC. Saylor was bullish once more despite the collapse of the biggest cryptocurrency in the world. He said,

“Bitcoin is a lifeboat”

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Michael Saylor, CEO of Microstrategy

Furthermore, there is a significant gap in the market as BTC prices keep falling. Although the future of the cryptocurrency is uncertain, the holders anticipate a potential rise. At the time of writing, Bitcoin (BTC) was priced at $20,597.97 with a daily rise of 1.36%.

Following Terra’s Demise, China’s State Media Notifies Stringent Crypto Regulations

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Following the demise of the Terra ecosystem, China’s state-owned media source, the Economic Daily, has suggested that the Chinese government may impose even stricter rules on cryptocurrencies and stablecoins.

The source revealed the collapse of TerraUSD (UST) and Luna (LUNA) in a story published on May 31, describing the algorithmic stablecoin’s workings. It took advantage of the so-called black swan occurrence to applaud China’s move to ban bitcoin.

“My country has been cracking down on virtual currency trading speculation and a large number of trading platforms.”“This has effectively blocked the transmission of this risk in China and avoided investment risks to the greatest extent possible.”

Reporter Li Hualin

Will China restrict crypto further?

Following the Terra collapse, Hualin explained that “many other countries” are looking to control stablecoins, citing Zhou Maohua, a researcher at the China Everbright Bank, to argue for more limitations within China:

“In the future, our country will also speed up the completion of regulatory shortcomings, and introduce targeted regulatory measures for the risk of stablecoins to further reduce the space for virtual currency speculation.”

Since mid-2021, China’s government has been toughening its position on cryptocurrency after outlawing crypto exchanges in 2017. Several government authorities have warned against investing in cryptocurrency, and there has been a massive crackdown on cryptocurrency mining in the country.

Colin Wu, a China-based cryptocurrency reporter, clarified the ban, saying that while the rules bar institutions from providing crypto services, “they do not prohibit regular people from utilizing cryptocurrencies – there is no specific law against it.”

Bitcoin (BTC) is subject to property rights, rules, and regulations, according to a Shanghai court, since its value, scarcity, and disposability satisfy the criteria of virtual property.

When it comes to how traders get their hands on cryptocurrency in the first place, Cointelegraph recently reported on the growing use of VPNs among Chinese traders. Traders began increasingly using offshore exchanges or peer-to-peer (P2P) networks for all of their activity after the previous wave of restrictions.

However, the Chinese Communist Party-controlled publication stated that regulators in other nations should “strive to develop worldwide general standards” to increase surveillance on cross-border payments.

China’s BSN Blockchain Ready For Global Expansion Despite ‘Challenges’

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China’s blockchain-based service network a.k.a BSN is eyeing its first major international expansion, according to a CNBC report. CEO Yifan revealed the firm’s plan to launch a project called BSN Spartan Network overseas sometime in August.

The Hong Kong-based firm boasts itself as a “one-stop-shop” for blockchain cloud applications. It aims to bridge different blockchains together to help businesses deploy the technology.

Even though Chinese President Xi Jinping has doubled down on Blockchain technology, elevating it to a national priority, it is strictly against any cryptocurrencies other than Digital Yuan.

Due to this, the Spartan Network will rely on half a dozen public blockchains that do not operate with cryptocurrencies. One of those will be a non-crypto version of the Ethereum blockchain when the project launches in August.

Yifan also confirmed that the Blockchain transactions fee will be paid in U.S. dollars rather than Ethereum’s related cryptocurrency called ether.

“The purpose of this is to drop the cost to use public chains to very minimal so that more traditional IT [information technology] systems and business systems can use public chains as part of their systems. That is why we are working with other major public chain protocols to convince them the mainstream is non-crypto public chains.”

More hurdles for BSN ahead

Being a blockchain firm and not dealing with cryptocurrencies will have its challenges. The CEO admitted that the initial years will be “difficult to push as most people in the blockchain industry only understand crypto.

Not only that, as it is backed by the Chinese government, foreign firms would likely be a bit hesitant to do business with the firm.

But Yifan begged to differ saying, “People will say BSN is from China, it is dangerous. Let me emphasize, BSN Spartan will be open source … we will not access anything from our end.”

“That is why when we a launch in August we will open-source immediately and we are working with a lot of western companies,” he added.

On the other hand, here is some good news for Bitcoiners.

China’s iron hold over Bitcoin miners from running operations in the country seems to be wavering. Data from the Cambridge Bitcoin Electricity Consumption Index [CBECI] showed that activity has picked up again and the nation is now the second-largest Bitcoin miner, after the US.

China Regains the Title of the 2nd Top Bitcoin Mining Hub

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According to recent research, China failed to implement its cryptocurrency prohibition last year, and the country has since resurfaced as one of the world’s main Bitcoin (BTC) mining hubs.

China became the second-largest Bitcoin hash rate supplier in January 2022, according to the Cambridge Bitcoin Electricity Consumption Index (CBECI), months after local officials banned all crypto operations in the country.

According to data, Chinese bitcoin miners generated 21.1 percent of the entire global BTC mining hash rate distribution in early 2022, behind only the United States, which generated 37.8% of the total hash rate in January.

China once hailed the bitcoin mining industry

In 2019, China was the world’s largest Bitcoin mining country, accounting for more than 75% of worldwide BTC hash rate power. In July and August 2021, the hash rate decreased to 0% after a string of crypto mining farm closures around the country.

Despite the crypto ban in September 2021, the hash rate share climbed to 22.3 percent in that month and never went below 18 percent during the research period.

The new data, according to CBECI project leader Alexander Neumueller, is sufficient to prove that Bitcoin mining is still active in China.

Kazakhstan, the world’s third-largest BTC mining center, sees a modest reduction in hash rate share, according to the latest CBECI data. Kazakhstan’s contribution to the BTC hash rate fell from 18 percent in August to 13.2% in January.

Miners are currently mining up to 9% of the global BTC hash rate in unspecified places, according to CBECI statistics. With 6.5 percent and 4.7 percent, respectively, Canada and Russia are the next two largest mining centers.

Russia has dropped out of the top three nations in terms of BTC hash rate power, as well.

The most recent CBECI update provides more granular statistics on hashrate distribution in the state’s main Bitcoin mining market.

According to the figures, Georgia, Texas, and Kentucky have the greatest hash rate, accounting for 32 percent, 11.2 percent, and 10.9 percent, respectively. These three states collectively account for more than half of the overall hash rate in the US.

States like New York, California, North Carolina, and Washington, according to data, have major mining activity.