China Tracks Telecom Fraud Funds Through Illegal Crypto Trades
- Anhui police traced telecom fraud funds through illegal cryptocurrency trading networks.
- A six-month investigation led officers from Hefei to Sichuan for the arrest operation.
- Authorities say virtual assets enable fast concealment of scam proceeds across regions.
Police in China’s Anhui Province have dismantled a cross-provincial virtual currency laundering network linked to telecom fraud after a six-month investigation, according to Anhui Online News. The Hefei Xinzhan Public Security Bureau traced proceeds from an online scam into illegal cryptocurrency transactions, revealing how fraud groups channel stolen funds through digital assets.
Investigators said the case reflects a recurring method used by criminal groups to conceal illicit proceeds, which has driven coordinated enforcement actions across multiple regions.
Scam Discovery and Financial Trail
The case dates back to June 2025, when a man in Hefei’s Xinzhan District clicked an unfamiliar phone advertisement and downloaded a dating application. Soon afterward, individuals posing as platform operators persuaded him to join an online shopping scheme that claimed to restore his account and enable local dating.
The victim executed his actions according to the instructions, which he believed to be authentic and organized. The instructions required him to deliver gold to an established offline destination. The transaction incurred a 260,000 yuan loss because the expected returns did not come through. The fraud report investigation showed officers found suspicious money transfers, indicating an intermediary managed the group’s financial operations.
Further analysis pointed to a virtual currency “acceptor” operating behind the scenes to process and move the stolen funds.
Police tracked the financial trail and found that the fraudulent money passed through virtual currency trades before reaching personal accounts. The pattern showed how digital assets were used to disrupt traceability and complicate recovery efforts.
Six-Month Investigation and Arrest
Following the discovery, officers launched a detailed investigation that examined transaction records, trading platforms, and communication channels linked to the laundering operation. The inquiry identified a suspect surnamed Liu, who allegedly exchanged virtual currency on behalf of the fraud group.
On January 15, 2026, investigators traveled overnight to Sichuan Province and arrested Liu at his hiding location, bringing the cross-provincial pursuit to an end. Police later confirmed that Liu sold virtual currency on an illegal trading platform on June 7, 2025.
After the transaction, funds connected to the Hefei victim entered Liu’s personal bank account, establishing a direct financial link to the scam. Despite recognizing the funds as suspicious, Liu withdrew the money and transferred it to his personal WeChat account, officers said.
Related: China Nears US as Top Bitcoin Holder Despite Long Crypto Ban
Crypto Trading and Enforcement Context
Investigators found that Liu began his cryptocurrency trading activities in 2020 because he wanted to earn fast profits without being monitored by domestic authorities. He reportedly used overseas messaging applications to contact buyers and repeatedly traded with telecom fraud groups on illegal platforms.
Police said these activities constitute the crime of concealing and covering up criminal proceeds under Chinese law. After interrogation, Liu confessed and now faces prosecution, while authorities continue to pursue other individuals connected to the network.
China has intensified nationwide operations targeting phone-based scams and financial fraud, with a focus on the payment channels that sustain such crimes. A separate Reuters report said regulators across Asia are tightening controls on illicit crypto activity, unauthorized trading, and cross-border fund transfers.
The Anhui case illustrates how law enforcement now combines traditional fraud investigations with digital asset tracking as authorities continue tracing remaining suspects and related transactions.
