According to a report by NetEase's Qingliu Studio, Wang Shuiming, who was involved in Singapore's largest money laundering case, has been arrested in Montenegro and may be extradited to China. Su Weiyi, Wang's partner, has been confirmed as the mastermind behind the Hong Kong cryptocurrency scam platform AAX and was arrested by the Hong Kong police in July 2024.

Atom Asset (AAX) is one of Hong Kong's largest cryptocurrency exchanges, with over 2 million users. On November 13, 2022, just two days after the cryptocurrency exchange FTX filed for bankruptcy, AAX also ceased withdrawals and cleared all its social media channels due to counterparty risk exposure. Initially, AAX attributed the freeze to security measures against suspected malicious attacks.

On November 15, 2022, AAX released a statement indicating that its platform required maintenance and, in addition to suspending withdrawals, would automatically liquidate derivatives. Subsequently, AAX halted platform operations and updates on social media. An anti-money laundering analysis platform conducted an in-depth study of the on-chain activities of AAX's exchange wallet and found that all 25,100 ETH had been transferred. Some ETH was exchanged for USDT, and then the funds were moved to different blockchains via Cross Bridge, a cross-chain bridge. According to some media reports, the exchange's founder held the private keys to user funds and the exchange wallet.

The use of cryptocurrencies for money laundering is closely related to their technological features (decentralization, anonymity), on-chain tools (mixers, cross-chain bridges), and value (exchangeability with fiat currency, purchasing power).

Cryptocurrencies typically do not rely on the management of central banks or government institutions but are maintained through a distributed network to record transactions. This decentralized nature excludes third parties, especially government intervention, making cryptocurrency transactions more convenient and flexible. However, it also weakens the regulatory oversight of traditional financial institutions, facilitating money laundering activities.

Although on-chain transactions are publicly accessible, cryptocurrency transfers are conducted through wallet addresses without binding to real identities. If cryptocurrencies are obtained through non-KYC channels (such as over-the-counter trading or cold wallet gifting), it becomes difficult to trace the holders of the cryptocurrencies. This anonymity makes it hard to track the identities of the transacting parties, providing a natural cover for money launderers.

Mixers (such as Tornado Cash, Blender.io) blend user funds and redistribute them, severing the source of the funds. Cross-chain bridges (such as Axelar) transfer assets to different blockchains for asset movement and exchange. For example, funds can be moved from a loosely regulated blockchain network to another and then hidden using privacy protocols (such as Aztec) to obscure transaction details. This creates multiple layers of anonymity, making it easier to evade regulatory and law enforcement tracking.

In some countries and regions, cryptocurrencies are recognized as legitimate payment tools. Currently, global regulatory standards for cryptocurrencies are not unified. This allows cryptocurrencies to be traded across borders without the approval of third-party institutions. Cryptocurrencies can be freely transferred from one country to another (cross-border cashing out), bypassing foreign exchange controls and exchange rate risks. Their exchangeability with fiat currency enables easy conversion into legal tender, thus achieving the whitewashing and legitimization of funds.

Cryptocurrencies, with their unique technological characteristics and operational mechanisms, are easily exploited by money launderers. To prevent and combat criminal activities, it is necessary to enhance user risk awareness, strengthen technical identification and prevention capabilities, and increase international cooperation and regulatory efforts.

In cryptocurrency transactions, when a person provides a wallet address to assist with transfers, how can we distinguish between aiding and abetting and concealing or disguising the proceeds of crime? If someone purchases real estate with illegally obtained cryptocurrencies, does it constitute money laundering? These actions often involve multiple elements of criminal offenses, leading to the following disputes: At which stage of the criminal chain does the act occur (before or after completion)? What is the level of awareness of the upstream crime (general knowledge or specific knowledge)? Is the nature of the funds specific to certain upstream crimes (such as the seven categories limited by money laundering offenses)? From the perspective of China's criminal law system, all three offenses involve the handling of proceeds of crime, and we can distinguish them from the following dimensions:

Implement a real-name system, verifying customers' identities effectively, including but not limited to identification documents, contact information, and transaction purposes. Prohibit anonymous accounts and restrict privacy coin transactions. Conduct enhanced due diligence for high-risk customers (such as those with large transactions or cross-border transactions) and maintain complete records.

Establish a real-time transaction monitoring system, integrating on-chain data (block explorer APIs), off-chain data (user KYC information), and third-party risk databases (such as Chainalysis, Elliptic). Deploy multi-dimensional risk models for anomaly detection (such as frequent splitting of transfers and other suspicious transactions). Implement tiered alerts and trigger actions (such as automatic account freezing, manual review, and suspicious activity reports). Conduct audits and reporting (maintain complete operation logs and regularly produce compliance reports).

Develop compliance systems, establish internal control systems for AML, clarify job responsibilities and operational procedures. Set up an independent compliance department to ensure the effective implementation of risk management measures and enhance internal supervision. Regularly train employees on AML laws and regulations to raise and reinforce their AML awareness.

Actively comply with and support the AML requirements of regulatory and law enforcement agencies, establishing regular communication mechanisms and assisting with data retrieval and account restrictions.

Typically, cryptocurrency money laundering may involve mixing services, fictitious transactions, layered transfers, over-the-counter trading, and forged identities. Money laundering disrupts financial order and fuels criminal activities such as fraud and corruption. It not only harms users' interests and tarnishes the reputation of the cryptocurrency industry but also poses potential threats to national security. Both individual users and cryptocurrency service providers need to enhance risk awareness, fulfill KYC and AML obligations, monitor suspicious transactions, and cooperate with regulators. By leveraging technical means and tools, they can maintain transaction security.

According to a report by NetEase's Qingliu Studio, Wang Shuiming, who was involved in Singapore's largest money laundering case, has been arrested in Montenegro and may be extradited to China. Su Weiyi, Wang's partner, has been confirmed as the mastermind behind the Hong Kong cryptocurrency scam platform AAX and was arrested by the Hong Kong police in July 2024.

Atom Asset (AAX) is one of Hong Kong's largest cryptocurrency exchanges, with over 2 million users. On November 13, 2022, just two days after the cryptocurrency exchange FTX filed for bankruptcy, AAX also ceased withdrawals and cleared all its social media channels due to counterparty risk exposure. Initially, AAX attributed the freeze to security measures against suspected malicious attacks.

On November 15, 2022, AAX released a statement indicating that its platform required maintenance and, in addition to suspending withdrawals, would automatically liquidate derivatives. Subsequently, AAX halted platform operations and updates on social media. An anti-money laundering analysis platform conducted an in-depth study of the on-chain activities of AAX's exchange wallet and found that all 25,100 ETH had been transferred. Some ETH was exchanged for USDT, and then the funds were moved to different blockchains via Cross Bridge, a cross-chain bridge. According to some media reports, the exchange's founder held the private keys to user funds and the exchange wallet.

The use of cryptocurrencies for money laundering is closely related to their technological features (decentralization, anonymity), on-chain tools (mixers, cross-chain bridges), and value (exchangeability with fiat currency, purchasing power).

Cryptocurrencies typically do not rely on the management of central banks or government institutions but are maintained through a distributed network to record transactions. This decentralized nature excludes third parties, especially government intervention, making cryptocurrency transactions more convenient and flexible. However, it also weakens the regulatory oversight of traditional financial institutions, facilitating money laundering activities.

Although on-chain transactions are publicly accessible, cryptocurrency transfers are conducted through wallet addresses without binding to real identities. If cryptocurrencies are obtained through non-KYC channels (such as over-the-counter trading or cold wallet gifting), it becomes difficult to trace the holders of the cryptocurrencies. This anonymity makes it hard to track the identities of the transacting parties, providing a natural cover for money launderers.

Mixers (such as Tornado Cash, Blender.io) blend user funds and redistribute them, severing the source of the funds. Cross-chain bridges (such as Axelar) transfer assets to different blockchains for asset movement and exchange. For example, funds can be moved from a loosely regulated blockchain network to another and then hidden using privacy protocols (such as Aztec) to obscure transaction details. This creates multiple layers of anonymity, making it easier to evade regulatory and law enforcement tracking.

In some countries and regions, cryptocurrencies are recognized as legitimate payment tools. Currently, global regulatory standards for cryptocurrencies are not unified. This allows cryptocurrencies to be traded across borders without the approval of third-party institutions. Cryptocurrencies can be freely transferred from one country to another (cross-border cashing out), bypassing foreign exchange controls and exchange rate risks. Their exchangeability with fiat currency enables easy conversion into legal tender, thus achieving the whitewashing and legitimization of funds.

Cryptocurrencies, with their unique technological characteristics and operational mechanisms, are easily exploited by money launderers. To prevent and combat criminal activities, it is necessary to enhance user risk awareness, strengthen technical identification and prevention capabilities, and increase international cooperation and regulatory efforts.

In cryptocurrency transactions, when a person provides a wallet address to assist with transfers, how can we distinguish between aiding and abetting and concealing or disguising the proceeds of crime? If someone purchases real estate with illegally obtained cryptocurrencies, does it constitute money laundering? These actions often involve multiple elements of criminal offenses, leading to the following disputes: At which stage of the criminal chain does the act occur (before or after completion)? What is the level of awareness of the upstream crime (general knowledge or specific knowledge)? Is the nature of the funds specific to certain upstream crimes (such as the seven categories limited by money laundering offenses)? From the perspective of China's criminal law system, all three offenses involve the handling of proceeds of crime, and we can distinguish them from the following dimensions:

Implement a real-name system, verifying customers' identities effectively, including but not limited to identification documents, contact information, and transaction purposes. Prohibit anonymous accounts and restrict privacy coin transactions. Conduct enhanced due diligence for high-risk customers (such as those with large transactions or cross-border transactions) and maintain complete records.

Establish a real-time transaction monitoring system, integrating on-chain data (block explorer APIs), off-chain data (user KYC information), and third-party risk databases (such as Chainalysis, Elliptic). Deploy multi-dimensional risk models for anomaly detection (such as frequent splitting of transfers and other suspicious transactions). Implement tiered alerts and trigger actions (such as automatic account freezing, manual review, and suspicious activity reports). Conduct audits and reporting (maintain complete operation logs and regularly produce compliance reports).

Develop compliance systems, establish internal control systems for AML, clarify job responsibilities and operational procedures. Set up an independent compliance department to ensure the effective implementation of risk management measures and enhance internal supervision. Regularly train employees on AML laws and regulations to raise and reinforce their AML awareness.

Actively comply with and support the AML requirements of regulatory and law enforcement agencies, establishing regular communication mechanisms and assisting with data retrieval and account restrictions.

Typically, cryptocurrency money laundering may involve mixing services, fictitious transactions, layered transfers, over-the-counter trading, and forged identities. Money laundering disrupts financial order and fuels criminal activities such as fraud and corruption. It not only harms users' interests and tarnishes the reputation of the cryptocurrency industry but also poses potential threats to national security. Both individual users and cryptocurrency service providers need to enhance risk awareness, fulfill KYC and AML obligations, monitor suspicious transactions, and cooperate with regulators. By leveraging technical means and tools, they can maintain transaction security.