Chinese intelligence allegedly tried to bribe US official with Bitcoin

The US Department of Justice has charged two Chinese intelligence officers with obstruction of justice for allegedly trying to bribe a US government employee with $61,000 in Bitcoin to steal documents related to an investigation into a China-based company.

“The Department of Justice will not tolerate attempts by any foreign power to undermine the rule of law on which our democracy is based,” said US Attorney General Merrick Garland during a press conference announcing the arrest of the two operatives.

The DOJ says the operation began in 2019 when the two intelligence officers approached a government employee who was a double agent working for the Federal Bureau of Investigation.

According to the US Department of Justice’s announcement, Guochun He and Zheng Wang allegedly wanted to steal files and other information from the US Attorney’s Office for the Eastern District of New York.

The documents the two officers were allegedly seeking relate to an ongoing federal investigation and prosecution of a global telecommunications company, known as Company-1 in the filing, based in the People’s Republic of China.

The DOJ’s charges include conspiracy to forcibly repatriate PRC nationals, attempting to obstruct a criminal prosecution, and conspiracy to act as an illegal agent in a foreign country.

The Ministry of Justice filed this complaint with another that describes a major sting operation and 13 others who have also been charged.

In the complaint, the DOJ alleges that in September 2022, Guochun He told the government employee that they would provide additional payment in Bitcoin for additional information beyond what had already been provided. In October, the operators allegedly paid the employee $20,000 in Bitcoin.

Blockchain intelligence firm Elliptic later revealed that its analysis of the Bitcoin transactions involved in the case shows that the Chinese agents used the Wasabi Wallet hashing service in an attempt to hide the transactions.

“There was enough information in the criminal complaint to uniquely identify the bitcoin transactions,” Elliptic Chief Scientist and Co-Founder Tom Robinson told Decrypt in an email. “We then used our blockchain analytics tools to trace the source of the payments and identify the use of Wasabi.”

Robinson says Elliptic has “special techniques” to identify bitcoin addresses associated with the Wasabi Wallet.

“Today’s complaint underscores the persistent efforts of the government of China to undermine the rule of law,” US Attorney Breon Peace said in a statement. “As alleged, the case involves an attempt by PRC intelligence officers to obstruct an ongoing criminal prosecution by making bribes to obtain files from this office and share them with a global telecommunications company that is an indicted defendant in an ongoing prosecution.”

Bitcoin’s use in crime has long been a ploy for regulators, and officials around the world have used such cases to call for bans on digital assets and cryptocurrencies. US officials have stepped up efforts in 2022 to curb the use of cryptocurrency in money laundering and other criminal activities, including banning US citizens from using Ethereum coin mixing service Tornado Cash.

“The same properties of digital assets that make them attractive to criminals—such as censorship resistance, pseudonymity, and the ease with which they can be transferred across borders—also make them valuable tools for any intelligence agency looking to fund covert operations,” Elliptic wrote.

If convicted, Guochun He faces up to 60 years and Wang faces up to 20 years in prison.

“We will always act decisively to counter criminal acts that target our justice system,” Peace said.