UK sanctions $20B scam market by cutting ‘legitimate’ crypto ties

It’s estimated that Xinbi processed more than $19.9 billion in illicit flows between 2021 and 2025 and that the platform is deeply interconnected with a range of other illicit services.

The UK government is cracking down on a $20 billion Chinese-language crypto guarantee marketplace, with sweeping sanctions aimed at cutting the platform off from crypto access.

The UK’s Foreign, Commonwealth & Development Office said in a statement Thursday that Xinbi provides crypto-based services, scam-enabling tools and other illicit services to bad actors and plays a central role in scam centers operating across Southeast Asia.

“The UK’s sanctions will isolate the platform from the legitimate crypto ecosystem, significantly disrupting its operations by affecting its ability to send and receive cryptocurrency transactions,” the agency said.

The latest wording from the UK government highlights a separation between legal and illicit crypto ecosystems rather than lumping them together — a positive direction for the industry’s reputation.

Under the sanctions, any UK assets connected to Xinbi will be frozen, and the platform will be barred from the country’s financial, trade and travel networks. UK-based businesses, including banks, crypto firms and individual citizens, are prohibited from providing goods, services, loans or investments to Xinbi.

Chainalysis estimates Xinbi processed more than $19.9 billion between 2021 and 2025 and is deeply interconnected with a range of other illicit services.

The department’s recent sanctions include Thet Li, who allegedly managed the international financial network of Prince Group, a Cambodia-based company accused of orchestrating large-scale crypto fraud schemes.

Hu Xiaowei, who is allegedly involved in the Prince Group’s financial network and #8 Park, a scam compound linked to the group, was also sanctioned.

Blockchain analytics company Chainalysis said in a report Thursday that the sanctions target the scam ecosystem’s on and off-ramps that enable large-scale fraud and are “exploiting the efficient, borderless nature of crypto rails.”

“By blacklisting a well-known Chinese-language guarantee marketplace, the FCDO is addressing the commercial marketplaces that sustain scam operators with payment facilitation and marketing services,” it said.

Related: There’s more to crypto crime than meets the eye: What you need to know

Traditional financial systems, such as wire transfers, have long been exploited for money laundering and fraud, largely because of their scale and global reach.

The Financial Action Task Force estimates that 2% to 5% of global GDP is laundered through traditional financial systems, whereas Chainalysis estimates that less than 1% of crypto transactions are linked to illicit activity.

The US has also intensified sanctions targeting illicit crypto operations. Earlier this month, the Treasury Department sanctioned six individuals and two entities for their alleged roles in an IT worker fraud scheme orchestrated by North Korea, a state actor that frequently targets the crypto industry.

Magazine: Big Questions: Can Bitcoin save you from the dreaded Cantillon Effect?

Source: CoinTelegraph