China’s Law Enforcement Probes Overseas Crypto Services

China’s Law Enforcement Agency Expands Crypto Probe To International Markets

China’s law enforcement agency is planning to extend its probe of crypto-related activity on the internet to overseas markets. The country’s Public Information Network Security Supervision department, which falls under the umbrella of its larger Ministry of Public Security, has been closely monitoring cryptocurrency exchanges operating outside of its borders. Additionally, the law enforcement unit has been keeping an eye on local crypto businesses that moved their operations to other countries.

The stated objective, according to Chinese Yicai news portal, of its investigation is to crack down on the illicit use of cryptocurrencies. Notably,  China’s government is concerned about money laundering, fraudulent pyramid schemes, and investment-related scams involving digital currencies. It might appear that Chinese authorities are stepping outside of their jurisdiction. However, as Yicai noted, the nation’s regulators are expanding their internet monitoring overseas because these crypto services are accessible to local investors.

Part Of A Larger Cryptocurrency Crackdown

China’s recent move in attempting to monitor cryptocurrency activity seems to be part of larger effort that has consisted of cracking down on its cryptocurrency exchanges. In fact, the country attempted to place a nationwide ban on all ICOs and fiat-to-crypto trading back in September 2017. Due to these restrictions, domestic crypto-exchanges and ICOs began to move their business overseas.

Despite several warnings from Chinese authorities about the risks involved in the loosely regulated crypto-market, the country’s citizens have continued to engage in digital currency trading and investment. Moreover, the nation’s self-regulated National Internet Finance Association warned investors last month to stay away from “disguised ICOs.” Per the Association, these questionable crypto-related activities had shifted their operations over to international markets, while still being accessible to local traders.

Detailed Warning About Cryptos

In an effort to do its part in warning Chinese crypto-investors about the various risks in the digital currency market, the Internet Finance Association issued the following disclaimer:

[The] Internet Finance Association called for a vast number of consumers and investors [to] recognize the nature of the relevant model…to enhance awareness of risk prevention, rational investment…[and] not blindly follow the trend of speculation.

Although China is attempting to expand its internet monitoring of cryptocurrencies overseas, the country has struggled to curb crypto-trading within its borders. For instance, during the clampdown of Chinese centralized crypto-exchanges, investors continued their activities through over-the-counter or peer-to-peer crypto-trading.

Other government-led efforts such as the Great Firewall of China, which blocks many major internet websites and services such as Google, Facebook, Youtube, can be bypassed fairly easily by simply using a reliable VPN (Virtual Private Network). Even though the country has taken extensive measures to censor and restrict what its citizens can access over the internet, they’ve had rather limited success. Therefore, it doesn’t seem likely that the Chinese government will be able to effectively police international crypto-related activity.