China’s Struggle with Capital Flight and Organized Crime
A recent study reveals that China’s ongoing efforts to control capital flight are being compromised by its own organized crime groups, which are increasingly utilizing Bitcoin and other cryptocurrencies for transnational money transfers. This research, conducted by Kathryn Westmore, a senior research fellow at the Centre for Finance and Security at the Royal United Services Institute, highlights how cryptocurrencies have become integral to China’s covert financial operations.
Role of Cryptocurrencies in Money Laundering
Westmore notes that Chinese Money Laundering Organizations (CMLOs) typically exchange illicit cash for virtual currencies like Bitcoin and stablecoins such as Tether (USDT). These digital currencies allow individuals to discreetly transfer their assets abroad, circumventing the stringent capital controls imposed by the Chinese government.
The rise in the use of cryptocurrencies aligns with an alarming growth in crypto-related criminal activity. Reports from Chainalysis indicate that losses from crypto scams reached over $2.3 billion in 2025 alone, with pig-butchering scams accounting for a staggering $4 billion in 2024. Furthermore, Westmore’s findings reveal that these laundering networks are not just confined to China; they have also become pivotal in facilitating financial operations for Western criminal enterprises, particularly in drug trafficking related to fentanyl.
Integration of Cryptocurrencies in the Opioid Market
The research outlines how proceeds from drugs sold in the United States are transformed into cryptocurrencies before being transferred to offshore accounts belonging to affluent Chinese individuals who prefer to keep their financial activities under the radar. Additionally, many suppliers of fentanyl precursor chemicals based in China are now accepting cryptocurrencies as direct payment, effectively integrating digital assets into the financial framework of the synthetic opioid market.
Supporting Westmore’s assertions, blockchain analytics firm Elliptic has identified on-chain transactions that link chemical suppliers in China to international fentanyl distribution networks.
With the use of cryptocurrencies deeply embedded in these global laundering schemes, Westmore cautions that the issue of financial crime has become too extensive for any single governmental body to tackle individually.
Recent Developments in Cybercrime
In a related development, Europol recently dismantled a highly organized cybercrime group linked to the creation of over 49 million fraudulent online accounts. This operation, dubbed “SIMCARTEL,” revealed a complex network of SIM card farms that supplied temporary phone numbers. These were exploited to bypass security measures like two-factor authentication, enabling criminals to generate fake identities and perpetrate widespread financial fraud, which included laundering money through deceptive online services.
This growing reliance on cryptocurrencies within both domestic and international crime syndicates underscores the urgent need for a coordinated global response to combat such complexities.
