The U.S. Department of Justice (DoJ) has taken significant action against the illicit online marketplace known as Xinbi Guarantee. In a coordinated effort announced on Wednesday, authorities seized Telegram channels used by the service, confiscated two cryptocurrency wallets, and deployed the Scam Center Strike Force to Madagascar to dismantle 13 scam compounds operated by Chinese crime syndicates.
Financial Impact of the Crackdown
The crackdown resulted in the freezing of approximately $52 million in cryptocurrency, adding to the nearly $938 million already restrained by the Scam Center Strike Force. These actions were taken alongside the Treasury Department’s Office of Foreign Assets Control (OFAC), which has sanctioned various Chinese-language media outlets for facilitating scams and other criminal activities targeting U.S. citizens.
According to Scott Bessent, Secretary of the Treasury, the Trump Administration is committed to dismantling these international criminal networks. The Treasury will continue to employ its full range of tools to disrupt these operations and protect American citizens from fraud.
Background on Xinbi Guarantee
Xinbi Guarantee emerged as a prominent marketplace on Telegram, particularly after the closure of similar platforms HuiOne Guarantee and Tudou Guarantee last year. Blockchain analytics firm Elliptic collaborated with the U.S. Secret Service to identify and freeze wallets containing $52.8 million in Tether’s USDT stablecoin.
Xinbi serves as an intermediary for vendors and scam center operators involved in romance scams, commonly known as “pig butchering.” The platform facilitates the creation of scam investment sites and the laundering of funds obtained from fraud victims. It also solicits trafficking victims to work in scam centers in Southeast Asia.
Global Reach and Future Actions
The DoJ has dismantled the Telegram channels associated with Xinbi and seized two cryptocurrency wallets, which held around $12 million. A total of $52.8 million worth of digital currency has been frozen across 52 wallets linked to Xinbi’s operations.
Special Agent Tara McLeese emphasized the significance of these actions, stating that criminals were laundering funds through Xinbi under the false impression that they were beyond the reach of U.S. law enforcement. The DoJ has announced plans to expand the Scam Center Strike Force’s operations globally, further targeting international fraud networks.
This initiative has already led to the takedown of 13 scam centers in Madagascar and the opening of investigations based on interviews with nearly 400 individuals. Among those detained, approximately 30, identified as Chinese leaders of the scam operations, have been repatriated to China.
Adapting to Regulatory Pressure
Historically, Xinbi transactions were conducted in Tether’s USDT stablecoin on the TRON blockchain. Following asset freezes, Xinbi has shifted to using USDD, another stablecoin pegged to the U.S. Dollar, exchanging about $2.8 million of its USDT holdings into USDD via a decentralized exchange.
Dr. Tom Robinson from Elliptic noted the challenges with USDD, highlighting that although it claims decentralization, it remains susceptible to freezing risks due to partial collateralization with USDT. This development marks a significant setback for the Guarantee marketplace ecosystem, as merchants and users now operate with heightened uncertainty over potential wallet identification and freezing.
