Chinese official media has highlighted the growing concern over corrupt officials utilizing advanced methods to conceal and transfer illicit gains.

This trend, marked by the use of cryptocurrencies and other digital mediums, was a central topic at the 2023 annual meeting of the China Integrity and Legal Research Association.

China Faces New Wave of Crypto-Related Corruption

The association, a national-level entity registered under the Ministry of Civil Affairs, discussed the increasing use of blockchain technology and virtual currencies in facilitating new forms of corruption. These methods, often difficult to trace, have posed significant challenges to the existing legal and regulatory frameworks.

Corrupt officials have been found using “cold storage” methods to store cryptocurrency addresses and private keys offline, effectively bypassing online scrutiny.

These methods include the use of hard drives and network disks to transfer cryptocurrencies out of the country for trading and redemption, as highlighted by Zhao Xuejun, an associate professor at Hebei University Law School.

Mo Hongxian, a professor at Wuhan University Law School, pointed out the unique challenges posed by the Internet society, including its cross-time and space interactivity, decentralization, and information-sharing features.

These characteristics facilitate the easy transfer of corrupt gains through means such as electronic red envelopes and gift cards, effectively moving corruption into the digital realm.

A November 2023 article from the Central Commission for Discipline Inspection and the State Supervision Commission noted the evasion of supervision through the acceptance of electronic consumer cards, delivery coupons, and other invisible forms of electronic transfers in corruption cases, classifying these practices as new forms of corruption.

China’s Congress and Legal Experts Urge for Stronger Laws and Measures

The 20th National Congress of the Communist Party of China and subsequent reports have emphasized the need to combat these new types of corruption.

Legal scholars like Liao Tianhu of Southwest University of Science and Technology are calling for stronger legal and regulatory framewor