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Crypto Journalist
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China’s long campaign to curb capital flight is being undermined by its own criminal networks, which have increasingly turned to Bitcoin and other digital assets to move money across borders, according to new research.
Key tips:
- Chinese money laundering networks are increasingly using Bitcoin and USDT to circumvent strict capital controls.
- The same networks now serve Western criminal groups, including the fentanyl supply chain.
- Researchers warn that crypto-enabled money laundering has become so globalized that no single jurisdiction can tackle the problem alone.
A document published this month by Kathryn Westmorea senior researcher at the Center for Finance and Security at the Royal United Services Institute, argues that cryptocurrencies have become a central pillar of China’s underground financial system.
Chinese Laundering Networks Turn to Crypto to Evade Capital Controls
Westmore said Chinese money laundering organizations (CMLOs) now routinely use virtual assets as conduits for illicit money.
“More and more, [CMLOs] They incorporate cryptocurrencies into their operations, providing criminals with virtual assets, such as Bitcoin, or stablecoins, such as Tether USDT, in exchange for their dirty money,” he wrote.
These digital assets then serve as a tool for individuals to quietly move wealth offshore, bypassing the strict capital controls that limit the movement of funds out of the country.
The change comes amid a broader rise in crypto-related crimes. Investor losses will exceed $2.3 billion in 2025, while pig slaughter scams will drain $4 billion from victims in 2024, according to Chainalysis.
Westmore’s research adds another dimension to that landscape, showing that Chinese laundry groups have also become crucial financial intermediaries for Western criminal operations, including the fentanyl supply chain.
The report describes how drug proceeds collected in the United States are converted into Bitcoin or USDT, then routed to offshore accounts belonging to wealthy Chinese clients looking for discreet channels to move funds abroad.
The use of crypto extends beyond laundry services. Many Chinese dealers of fentanyl precursor chemicals now accept Bitcoin and USDT directly, effectively turning digital assets into settlement infrastructure for trading synthetic opioids.
Blockchain analytics firm Elliptic confirmed these claims, documenting chain payments to China-based chemical suppliers linked to global fentanyl distribution networks.
With crypto rails deeply intertwined in these transnational laundering systems, Westmore warns that the problem is too vast for any single government to handle.
Europol Busts Ring Behind 49 Million Crypto-Linked Fake Accounts
In October, Europol dismantled a sophisticated cybercrime syndicate accused of creating more than 49 million fake accounts online, including fraudulent profiles linked to major cryptocurrency platforms.
The operation, codenamed ‘SIMCARTEL’, uncovered a sophisticated SIM farm-for-hire network selling temporary mobile numbers used to bypass two-factor authentication, allowing criminals to mass-produce fake identities and commit large-scale financial fraud.
According to Europol, the syndicate’s infrastructure supports the creation of accounts for a variety of online services, from e-commerce sites to digital banks and crypto exchanges.
These fake accounts were then used to launder illicit funds, conduct phishing campaigns, and facilitate smishing scams targeting European users.
