Recently, the Taiyuan police started from a clue of a large-scale gold transaction, conducted in-depth analysis and tracking, concentrated superior police forces, and completely dismantled a criminal gang that provided “money laundering” services for a telecommunications fraud gang using gold transactions. Up to now, the police have arrested a total of 15 criminal suspects, involving more than 127 cases of telecommunications network fraud across the country, with a total amount of 135 million yuan.
Spread across the country, laundering 135 million yuan
It is reported that the criminal gang, led by Deng, began to undertake the “money laundering” business of overseas telecommunications fraud and online gambling funds since early February 2023. The gang is divided into groups for fund reception, reconnaissance, credit card swiping, gold transportation, coin dealers, and disposal of stolen goods. After Deng contacted the overseas telecommunications fraud gang for “money laundering” business, he contacted “card merchants” to find “card farmers” to receive funds from overseas telecommunications fraud and online gambling. The reconnaissance gang went to major gold shops to conduct reconnaissance and find gold shops with a large amount of physical gold. Then, the credit card transportation group and the card farmers swiped credit cards to purchase gold, and then handed the gold to the gold transportation group in relatively concealed public places. The gold transporter transferred the gold to Shenzhen and handed it over to the coin dealer. The coin dealer handed it over to the disposal of stolen goods personnel for disposal, and converted the proceeds into virtual currency and handed it over to Deng. Finally, Deng transferred the virtual currency to the overseas telecommunications fraud gang. In order to evade the crackdown of the public security organs, Deng communicated with the overseas upper line and the domestic lower line through overseas chat software, and settled with virtual currency. Only from March 4th to March 9th, the gang purchased 27 kilograms of gold in Taiyuan City, worth more than 12 million yuan. At present, it has been verified that the gang is involved in 127 cases of telecommunications fraud nationwide, with a “money laundering” amount of 135 million yuan for overseas telecommunications fraud gangs.
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Gold-virtual currency, mismatched new model
In this case, we found that the criminal gang has clear division of labor and clear processes, forming a complex criminal chain from reconnaissance, credit card swiping, gold transportation, disposal of stolen goods, and conversion to virtual currency. We can see that the criminals use the method of purchasing gold, and the runner delivers it to the designated location through the gold shop, and then the disposal of stolen goods personnel exchange it for virtual currency through the coin dealer. The purpose of doing this is to confuse the source of funds and ultimately transfer the virtual currency overseas, completing the process of “whitewashing” illegal proceeds from fiat currency to virtual currency. “Gold + remote buying and selling + virtual currency” has become a new model of “mismatched trading” money laundering crime. From this, it can be seen that virtual currency may become an important part of more “mismatched trading”.
Virtual currency, breakthrough point for cases
Since the “card cutting” operation, it has become increasingly difficult and costly for criminals to launder money through fiat currency. Virtual currency is not only widely used in illegal fund transfers, but also becoming the new norm for wage payment within criminal groups. Therefore, in the investigation of such cases, the flow of virtual currency funds is the most important breakthrough point. Zhongke Chain Security provides some practical investigation ideas here:
1. In cases like this, starting with the flow of funds into bank cards, tracing down will involve many first-level cards, second-level cards, and corporate accounts (such as gold shop sellers). The key is to determine at which stage the suspect converted the funds involved. Some special transactions may be signals of fiat currency being converted into virtual currency, such as purchasing gold, mobile phone top-ups, cash withdrawals, etc. Often, the occurrence of such behavior indicates that the funds involved may have been transformed into virtual currency. At this time, the investigation approach should be switched from tracing fiat currency funds to tracing virtual currency funds, and efforts should be made to obtain the “involved address” where the funds flow back.
2. After obtaining the “involved address,” analyze the target address through fund analysis, trace the flow of funds outwards, further discover key case clues, quickly lock the suspect address, and determine the destination of the funds.
3. Conduct forensic investigation of the suspect address, find relevant transaction information in the forensic documents, use data analysis to investigate suspicious points, continue to track the flow of transactions, and further explore the relationship between the suspect and the currency traders.
4. Analyze a large amount of on-chain and off-chain transaction data, further analyze the matching degree of the suspect’s funds, behavior, devices, information, etc., mine the situation, transaction history, transaction time, and counterparty data of the address, penetrate the identity of the actual controller of the anonymous address on the blockchain, and bring the criminal entities to light one by one.
In the investigation of virtual currency-related cases, penetrating the flow of funds is one of the most important steps. Virtual currency, as an important carrier of illegal funds, is often difficult to crack through traditional technical means. Through the Anon·Virtual Currency Crime Warning and Tracking Platform, taking virtual currency addresses as the entry point and on-chain transaction tracing as the core, based on our own address label library, high-risk address database, and various virtual currency fund models in various cases, we assist law enforcement agencies in finding a path of attack from “address to suspect”.