crypto scams

As the underground industry of crypto investment scams has grown into one of the world’s most lucrative forms of cybercrime, the secondary market of money launderers for those scammers has grown to match it. Amid that black market, one such Chinese-language service on the messaging platform Telegram blossomed into an all-purpose underground bazaar: It has offered not only cash-out services to scammers but also money laundering for North Korean hackers, stolen data, targeted harassment-for-hire, and even what appears to be sex trafficking. And somehow, it’s all overseen by a company legally registered in the United States.

According to new research released today by crypto-tracing firm Elliptic, a company called Xinbi Guarantee has since 2022 facilitated no less than $8.4 billion in transactions via its Telegram-based marketplace prior to Telegram’s actions in recent days to remove its accounts from the platform. Money stolen from scam victims likely represents the “vast majority” of that sum, according to Elliptic’s cofounder Tom Robinson. Yet even as the market serves Chinese-speaking scammers, it also boasts on the top of its website—in Mandarin—that it’s registered in Colorado.

“Xinbi Guarantee has served as a giant, purportedly US-incorporated illicit online marketplace for online scams that primarily offers money laundering services,” says Robinson. He adds, though, that Elliptic has also found a remarkable variety of other criminal offerings on the market: child-bearing surrogacy and egg donors, harassment services that offer to threaten or throw feces at any chosen victim, and even sex workers in their teens who are likely trafficking victims.

Xinbi Guarantee is the second such crime-friendly Chinese-language market that Robinson and his team of researchers have uncovered over the past year. Last July, they published a report on Huione Guarantee, a similar Cambodia-based service that Elliptic said in January had facilitated $24 billion in transactions—largely from crypto scammers—making it the biggest illicit online marketplace in history by Elliptic’s accounting. That market’s parent company, Huione Group, was added to a list of known money laundering operations by the US Treasury’s Financial Crimes Enforcement Network earlier this month in an attempt to limit its access to US financial institutions.

Telegram bans

After WIRED reached out to Telegram last week about the illicit activity taking place on Xinbi Guarantee’s and Huione Guarantee’s channels on its messaging platform, Telegram appears to have responded Monday by banning many of the central channels and administrator accounts used by both Xinbi Guarantee and Huione Guarantee. “Criminal activities like scamming or money laundering are forbidden by Telegram’s terms of service and are always removed whenever discovered,” Telegram spokesperson Remi Vaughn wrote to WIRED in a statement. “Communities previously reported to us by WIRED or included in reports published by Elliptic have all been taken down.”

Telegram had banned several of Huione Guarantee’s channels in February following an earlier Elliptic report on the marketplace, but Huione Guarantee quickly re-created them, and it’s not clear whether the new removals will prevent the two companies from rebuilding their presence on Telegram again, perhaps with new accounts or even new branding. “These are very lucrative businesses, and they’ll attempt to rebuild in some way,” Robinson said of the two marketplaces following Telegram’s latest purge.

Elliptic’s accounting of the total lifetime revenue of the biggest online black markets.Courtesy of Elliptic

Xinbi Guarantee didn’t respond to multiple requests for comment on Elliptic’s findings that WIRED sent to the market’s administrators on Telegram.

Like Huione Guarantee, Xinbi Guarantee has offered a similar “guarantee” model of enabling third-party vendors to offer services by requiring a deposit from them to prevent fraud. Yet it’s flown under the radar, even as it grew into one of the biggest hubs for crypto crime on the Internet. In terms of scale of transactions prior to Telegram’s crackdown, it was second only to Huione’s market, according to Elliptic.

Both services “offer a window into the China-based underground banking network,” Robinson says. “It’s another example of these huge Chinese-language ‘guaranteed’ marketplaces that have thrived for years.”

On Xinbi Guarantee, Elliptic found numerous posts from vendors offering to accept funds related to “quick kills,” “slow kills,” and “pig butchering” transactions, all different terms for crypto investment scams and other forms of fraud. In some cases, Robinson explains, these Xinbi Guarantee vendors offer bank accounts in the same country as the victim so that they can receive whatever payment they’re tricked into making, then pay the scammer in the cryptocurrency Tether. In other cases, the Xinbi Guarantee merchants offer to receive cryptocurrency payments and cash them out in the scammer’s local currency, such as Chinese renminbi.

Not just money laundering

Aside from Xinbi Guarantee’s central use as a cash-out point for crypto scammers, Elliptic also found that the market’s vendors offered other wares for scammers such as stolen data that could be used for finding victims, as well as services for registering SIM cards and Starlink Internet subscriptions through proxies.

North Korean state-sponsored cybercriminals also appear to have used the platform for money laundering. Elliptic found through blockchain analysis, for instance, that about $220,000 stolen from the Indian cryptocurrency exchange WazirX—the victim of a $235 million theft in July 2024, widely attributed to North Korean hackers—had flowed into Xinbi Guarantee in a series of transactions in November.

Those money-laundering and scam-enabling services, however, are far from the only shady offerings found on Xinbi Guarantee’s market. Elliptic also found listings for surrogate mothers and egg donors, with one post showing faceless pictures of the donor’s body. Other accounts have offered services that will, for a payment in Tether, place a funeral wreath at a target’s door, deface their home with graffiti, post damaging statements around their home, have someone verbally threaten them, throw feces at them, or even, most bizarrely, surround their home with AIDS patients. One posting suggested these AIDS patients would carry “case reports and needles for intimidation.”

Other listings have offered sex workers as young as 18 years old, noting the specific sex acts that are allowed and forbidden. Elliptic says that one of its researchers was even offered a 14-year-old by a Xinbi Guarantee merchant. (The account holder noted, however, that no transaction for sex with someone below the age of 18 would be guaranteed by Xinbi. The legal age of consent in China is 14.)

Exactly why Xinbi Guarantee is legally registered in the US remains a mystery. Its incorporation record on the Colorado Secretary of State’s website shows an address at an office park in the city of Aurora that has no external Xinbi branding. The company appears to have been registered there in August of 2022 by someone named “Mohd Shahrulnizam Bin Abd Manap.” (WIRED connected that name with several people in Malaysia but couldn’t determine which one might be Xinbi Guarantee’s registrant.) The listing is currently marked as “delinquent,” perhaps due to failure to file more recent paperwork to renew it.

For fledgling Chinese companies—legitimate and illegitimate—incorporating in the US is an increasingly common tactic for “projecting legitimacy,” says Jacob Sims, a visiting fellow at Harvard’s Asia Center who focuses on transnational Chinese crime. “If you have a US presence, you can also open US bank accounts,” Sims says. “You could potentially hire staff in the US. You could in theory have more formalized connections to US entities.” But he notes that the registration’s delinquent status may mean Xinbi Guarantee tried to make some sort of inroads in the US in the past but gave up.

While Telegram has served as the chief means of communication for the two markets, the stablecoin cryptocurrency Tether has served as their primary means of payment, Elliptic found. And despite Telegram’s new round of removals of their channels and accounts, Xinbi Guarantee and Huione Guarantee are far from the only companies to use Tether and Telegram to create essentially a new, largely Chinese-language darknet: Elliptic is tracking close to 30 similar marketplaces, Robinson says, though he declined to name others in the midst of the company’s investigations.

Just as Telegram shows new signs of cracking down on that sprawling black market, Tether, too, has the ability to disrupt criminal use of its services. Unlike other more decentralized cryptocurrencies such as Bitcoin, Tether can freeze payments when it identifies bad actors. Yet it’s not clear to what degree Tether has taken measures to stop Chinese-language crypto scammers and others on Xinbi Guarantee and Huione Guarantee from using its currency.

When WIRED wrote to Tether to ask about its role in those black markets, the company responded in a statement that it encourages “firms like Elliptic and other blockchain intelligence providers to share critical data with law enforcement so we can act swiftly and in coordination.”

“We are not passive observers—we are active players in the global fight against financial crime,” the Tether statement continued. “If you’re considering using Tether for illicit purposes, think again: it is the most traceable asset in existence. We will identify you, and we will work to ensure you are brought to justice.”

Despite that promise—and Telegram’s new effort to remove Huione Guarantee and Xinbi Guarantee from its platform—both tools have already been used to facilitate tens of billions of dollars in theft and other black market deals, much of it occurring in plain sight. The two largely illegal and very public markets have been “remarkable for both the scale at which they’re operating and also the brazenness,” says Harvard’s Jacob Sims.

Given that brazenness and the massive criminal fortunes at stake, expect both markets to attempt a revival in some form—and plenty of competitors to try to take their place atop the Chinese-language crypto crime economy.

This story originally appeared on wired.com.