Regulation News

China’s National Prosecutor Takes Action Against Blockchain Cybercrimes

Zhang Xiaojin, Director of the Fourth Prosecutor’s Office of China’s Supreme People’s Procuratorate (SPP), has issued a warning to citizens and participants in the digital asset space about investment scams in the local cryptographic economy.

In an effort to combat the rising tide of cybercrime, the SPP, which is the highest prosecutorial authority in China, is targeting criminals who use blockchain and metaverse projects for illegal activities. The SPP is concerned about the increase in online fraud, cyber violence, and breaches of personal information. It has reported a significant rise in cybercrimes carried out on the blockchain and within the metaverse, noting that criminals are increasingly using digital currencies for money laundering, complicating the tracking of their illegal wealth.

Ge Xiaoyan, Deputy Prosecutor General of the SPP, stated that remote fraud charges related to cybercrimes have increased by 64% compared to last year. While blockchain-related crimes are on the rise, traditional crimes such as gambling, theft, pyramid schemes, and counterfeiting have also expanded in cyberspace. She emphasized that costs related to internet theft have increased by nearly 23%, while costs associated with online counterfeiting and the sale of substandard goods have almost doubled by 86%.

Prosecutors have brought charges against 280,000 individuals in cybercrime cases from January to November, marking a 36% year-on-year increase and accounting for 19% of all criminal offenses, as reported by Xiaoyan. Zhang Xiaojin also warned citizens and digital asset participants about investment scams in the local cryptographic economy, pointing to the rise of new cybercrimes using metaverse platforms, blockchain, and binary options. Xiaojin highlighted that digital currencies have become the focal point of these activities, underscoring the need for increased vigilance.

China’s efforts to crack down on digital asset-related crimes contrast with Hong Kong’s approach. The special administrative region of China has adopted a different strategy by implementing crypto-friendly regulations to standardize its digital asset ecosystem and protect investors without stifling innovation. The People’s Bank of China (PBoC) addressed issues related to digital currency regulations and decentralized finance in its latest financial stability report. The central bank of China dedicated a separate section to digital currency assets, emphasizing the need to regulate the industry through joint efforts of different countries.

In 2021, the PBoC formally announced measures to combat the adoption of crypto in mainland China, pushing for stronger inter-departmental coordination to suppress crypto activities in the country. Despite a ban covering nearly all cryptocurrency transactions and mining, mainland China remains a major hub for digital currency mining.

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