The $20 billion cryptocurrency scam market is facing a new government crackdown

Chinese language online black Markets have become one of the largest cybercrime engines in history, processing tens of billions of dollars in illicit financing every year. By aiding the trade of stolen data, money laundering services, and sometimes even electrified shackles, these underground markets have fueled fraud and human trafficking around the world. Now, officials in the United Kingdom have dealt a potential punitive blow to a $20 billion cryptocurrency market.

On Thursday, the UK’s Foreign, Commonwealth and Development Office, also known as the Foreign Office, unveiled financial sanctions against the online Xinbi Guarantee marketplace, which will likely limit its operations. This online bazaar, which was operated using channels and accounts on the messaging platform Telegram, has previously been linked to billions of dollars in cryptocurrency transactions and has proven difficult to disrupt.

The sanctions against Xinpei came as British officials also imposed sanctions on several individuals allegedly linked to the operation of industrial-sized fraudulent complexes in Cambodia, including the 20,000-person No. 8 Park complex. The British government also seized properties in London, including a penthouse apartment worth £9 million, linked to the sanctioned individuals. State Department Secretary Stephen Doughty said in a statement that the sanctions “send a clear message” that those running fraud pools will face consequences. The measure follows a broad wave of sanctions from the US and UK against Cambodia-related scams in October.

Over the past decade, hundreds of thousands of human trafficking victims have been forced to work in compounds across Cambodia and Southeast Asia, where they ply online cryptocurrency investing and romance scams day and night. The multi-billion-dollar fraud industry, often linked to Chinese organized crime groups, has flourished and has been fueled by secondary services and cryptocurrency markets that sell the tools and technical infrastructure needed to run scams. These markets include Xinbi, which has become one of the largest since sanctions were imposed on Huione Group last year.

The UK sanctions registry alleges that “Shenbi is involved or implicated in making financial gain or deriving benefit from human rights abuses,” referring to brutal treatment and torture that occurred in some fraud complexes in the region. “Xinbi enabled and benefited from the operation of fraud centers in Southeast Asia.”

“Sanctions will make it more difficult for Xinbi, its merchants and users, to spend or exchange cryptocurrencies that have passed through the market,” Tom Robinson, chief scientist and co-founder of cryptocurrency tracking firm Elliptic, tells WIRED. Last year, an analysis from Elliptic revealed that Xinbi’s escrow platform had facilitated at least $8.4 billion in transactions since 2022. The “vast majority” of those funds, Robinson said at the time, were likely money stolen from victims of online fraud. However, other activity of the platform also includes selling technology, personal data and money laundering services needed to run online frauds.

Following a WIRED report last May, Telegram removed channels and accounts associated with both Huione and Xinbi Market. However, since then, Xinbi has rebuilt its presence on Telegram and has also moved to diversify its infrastructure to be more resilient to takedown actions.

“Xinbi was able to recover very effectively from the action Telegram took against her. She simply created new Telegram channels and continued her activity,” Robinson told WIRED. ‘In fact, it has grown significantly, increasing its market share after the closure of Huione Guarantee and other similar markets.’ Robinson now estimates that across the entire Xinbei region, including the traders who operate it and its infrastructure, $19.7 billion has been processed.