Technical report offers unprecedented glimpse into how investigators crack devices, pinpoint funds and freeze illicit virtual assets
Quick Look
Chinese police have published a detailed technical report revealing their sophisticated forensic tools and methods for tracking, seizing, and freezing illicit cryptocurrencies like Bitcoin and Ethereum, which are banned in China but favored by criminals for scams and money laundering.
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Why It Matters
China banned the use of cryptocurrencies as currency in 2021, with new rules earlier this year cracking down on stablecoins and tokenization of real-world assets. Despite the ban, criminals continue to use virtual coins for illicit activities.
Chinese police have published a detailed technical report on tracking, seizing, and freezing cryptocurrency – revealing a sophisticated arsenal of forensic tools.
Bitcoin, Ethereum and the like may be household names, but they are illegal in China.
A 2021 government notice banned their use as currency, and new rules from earlier this year went even further, cracking down on stablecoins and the tokenisation of real-world assets. Yet despite the ban, criminals still favour virtual coins for scams, gambling and money laundering because crypto transfers hide identities and do not require approval by central authorities.
A rare technical paper published on June 4 in the journal Forensic Science and Technology offers an unprecedented glimpse into how Chinese law enforcement agencies pursue illicit virtual assets.
The authors – Sun Shengbin of the Wenzhou Public Security Bureau, Lou Yandi of the Zhejiang Provincial Public Security Department’s Criminal Investigation Corps, and their colleagues – outline the process of evidence collection, transaction tracing and asset seizure.
To understand how they track crypto, one must first grasp how it is stored. Every bitcoin and Ethereum wallet holds a private key – a 64‑digit hexadecimal string generated by a secure random number generator. Whoever controls that key controls the wallet’s contents.
Open Questions
- How effective are these methods in reducing crypto crime rates?
- Will other countries adopt similar forensic techniques?
