China Is Fueling Crypto Crime, From North Korea to Mexican Cartels: TRM

Hifi Tech India

What do North Korean hackers, Mexican drug cartels, Russian mobsters, and scammers impersonating your boss on Telegram have in common? They all depend on the Chinese black market to launder their billions in crypto, according to new research.

Despite crypto’s reputation as an uncensorable, borderless financial underworld, most major criminal groups utilizing digital assets wouldn’t be able to do so without the aid of sophisticated underground Chinese banking networks, according to blockchain intelligence firm TRM Labs.

TRM’s leadership, which boasts decades of federal government experience, says U.S. policy has so far failed to address what the firm sees as an undeniable reality: From state enemies like North Korea on down to common crypto conmen known as pig butchers, the nefarious use of digital assets would not be possible on a large scale without the money laundering expertise of Chinese crime syndicates.  

Ari Redbord, TRM’s global head of policy, believes U.S. law enforcement has so far failed to address how these diverse criminal actors depend on the same illicit banking network to function.

“We've been treating fentanyl like a drug crime, we've been treating North Korea like a cyber crime, we've been talking about pig butchering like scams,” Ari Redbord, a former Treasury Department official and U.S. attorney, told Decrypt in a recent interview. “People need to stop talking about these things as siloed threats and start talking about the Chinese money-laundering networks facilitating all of it.”

Take one recent, prominent example: In February, North Korea pulled off the biggest hack in history, stealing some $1.4 billion worth of Ethereum from crypto exchange Bybit in a matter of seconds.

While the record-shattering heist did sound alarm bells about North Korea’s elite hacking ability—and the potential complicity of third-party crypto exchanges in allowing the rogue nation to off-ramp stolen ETH—few at the time acknowledged it wasn’t even North Korea laundering those funds.  

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China Is Fueling Crypto Crime, From North Korea to Mexican Cartels: TRM
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China is a big player in the Bitcoin market. Image: Shutterstock
China is a big player in the Bitcoin market. Image: Shutterstock

What do North Korean hackers, Mexican drug cartels, Russian mobsters, and scammers impersonating your boss on Telegram have in common? They all depend on the Chinese black market to launder their billions in crypto, according to new research.

Despite crypto’s reputation as an uncensorable, borderless financial underworld, most major criminal groups utilizing digital assets wouldn’t be able to do so without the aid of sophisticated underground Chinese banking networks, according to blockchain intelligence firm TRM Labs.

TRM’s leadership, which boasts decades of federal government experience, says U.S. policy has so far failed to address what the firm sees as an undeniable reality: From state enemies like North Korea on down to common crypto conmen known as pig butchers, the nefarious use of digital assets would not be possible on a large scale without the money laundering expertise of Chinese crime syndicates.  

Ari Redbord, TRM’s global head of policy, believes U.S. law enforcement has so far failed to address how these diverse criminal actors depend on the same illicit banking network to function.

“We've been treating fentanyl like a drug crime, we've been treating North Korea like a cyber crime, we've been talking about pig butchering like scams,” Ari Redbord, a former Treasury Department official and U.S. attorney, told Decrypt in a recent interview. “People need to stop talking about these things as siloed threats and start talking about the Chinese money-laundering networks facilitating all of it.”

Take one recent, prominent example: In February, North Korea pulled off the biggest hack in history, stealing some $1.4 billion worth of Ethereum from crypto exchange Bybit in a matter of seconds.

While the record-shattering heist did sound alarm bells about North Korea’s elite hacking ability—and the potential complicity of third-party crypto exchanges in allowing the rogue nation to off-ramp stolen ETH—few at the time acknowledged it wasn’t even North Korea laundering those funds.  

“All the people taking Ethereum and turning it into Bitcoin through Thorchain and services like that are third parties,” Nick Carlsen, a senior TRM investigator and former FBI analyst, told Decrypt. “That’s not the North Koreans. Those are the Chinese money launderers.”

News
Law and Order
China Is Fueling Crypto Crime, From North Korea to Mexican Cartels: TRM
Crypto’s most notorious criminals share a common link: They rely on a small clique of underground Chinese bankers to survive, new research shows.
Sander Lutz
By Sander Lutz
Apr 17, 2025
5 min read
China is a big player in the Bitcoin market. Image: Shutterstock
China is a big player in the Bitcoin market. Image: Shutterstock

What do North Korean hackers, Mexican drug cartels, Russian mobsters, and scammers impersonating your boss on Telegram have in common? They all depend on the Chinese black market to launder their billions in crypto, according to new research.

Despite crypto’s reputation as an uncensorable, borderless financial underworld, most major criminal groups utilizing digital assets wouldn’t be able to do so without the aid of sophisticated underground Chinese banking networks, according to blockchain intelligence firm TRM Labs.

TRM’s leadership, which boasts decades of federal government experience, says U.S. policy has so far failed to address what the firm sees as an undeniable reality: From state enemies like North Korea on down to common crypto conmen known as pig butchers, the nefarious use of digital assets would not be possible on a large scale without the money laundering expertise of Chinese crime syndicates.  

Ari Redbord, TRM’s global head of policy, believes U.S. law enforcement has so far failed to address how these diverse criminal actors depend on the same illicit banking network to function.

“We've been treating fentanyl like a drug crime, we've been treating North Korea like a cyber crime, we've been talking about pig butchering like scams,” Ari Redbord, a former Treasury Department official and U.S. attorney, told Decrypt in a recent interview. “People need to stop talking about these things as siloed threats and start talking about the Chinese money-laundering networks facilitating all of it.”

Take one recent, prominent example: In February, North Korea pulled off the biggest hack in history, stealing some $1.4 billion worth of Ethereum from crypto exchange Bybit in a matter of seconds.

While the record-shattering heist did sound alarm bells about North Korea’s elite hacking ability—and the potential complicity of third-party crypto exchanges in allowing the rogue nation to off-ramp stolen ETH—few at the time acknowledged it wasn’t even North Korea laundering those funds.  

“All the people taking Ethereum and turning it into Bitcoin through Thorchain and services like that are third parties,” Nick Carlsen, a senior TRM investigator and former FBI analyst, told Decrypt. “That’s not the North Koreans. Those are the Chinese money launderers.”

Bybit. Image: Shutterstock
Bybit CEO: This Is 'Critical' Week to Freeze Funds From $1.4 Billion Hack
The CEO of Bybit has warned that the exchange is in a race against time to recover the $1.4 billion in crypto stolen by North Korean hackers. In an update on X, formerly Twitter, Ben Zhou revealed that 20% of the Ethereum taken in last month's audacious attack has already "gone dark." About 77% of the illicit funds remain traceable, meaning just 3% has been successfully frozen. All of this comes as data from Nansen reveals that those responsible have "officially emptied their wallet," going from...

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Carlsen argues the threat posed by exchanges that facilitated North Korea-linked transactions pales in comparison to that of black market Chinese bankers, who have turned converting stolen crypto into a fine-tuned service.

These informal banks, which TRM says are mainly operated by Chinese organized crime syndicates called triads, take incoming crypto from various criminal enterprises, and swap it for fiat that Chinese nationals want to get out of the nation’s notoriously restrictive banking system. TRM’s on-chain research has shown as much.

“If you're Chinese and you want to buy a million-dollar house in L.A., you run through these guys,” Carlsen said. “That's how you get access to money in the United States.”

If that global system were somehow hobbled, Carlsen is adamant the development could cripple organizations like the Sinaloa Cartel—which, per TRM, depends on Chinese laundering of stablecoins, dollar-pegged crypto assets like Tether’s USDT, to operate.

“It would be a gut blow,” he said.

Could it be done? TRM says yes. Chinese money laundering networks currently rely on offshore safe havens in southeast Asian nations like Cambodia; those countries could be targeted by U.S. sanctions to eliminate the practice, the firm contends.