Telegram’s crackdown on the $27 billion Haowang Guarantee platform has shone a spotlight on the dark underbelly of the crypto world, where criminal networks thrive through encrypted channels and anonymous transactions. On May 13, the platform—labeled the world’s largest illicit crypto marketplace by Elliptic—was dismantled following a coordinated effort to block thousands of accounts linked to its operations.

Elliptic’s investigation revealed that Haowang was more than just a laundering platform; it was a full-scale criminal enterprise that processed billions in USDT, including funds linked to North Korea’s Lazarus Group. The group is infamous for its high-profile cyberheists, including the theft of over $1.34 billion in 2024 alone, with funds funneled through Haowang and Xinbi.

Despite the shutdown, Elliptic warns that Haowang’s operators are already regrouping, attempting to re-establish their network on Telegram under new aliases. Telegram’s decentralized nature and end-to-end encryption provide the perfect cover for criminal organizations to continue their operations with minimal risk of detection.

Crypto-Backed Crime Surge – From Cyberheists to Violent Abductions

The Haowang crackdown is just the tip of the iceberg in the ongoing battle against crypto-fueled crime. In 2024, the volume of illicit crypto transactions surged to $40.9 billion, a 21% increase from the previous year, according to Chainalysis.

Among the worst offenders were North Korea’s Lazarus Group and Tradetraitor, which leveraged sophisticated techniques to steal millions in Bitcoin and stablecoins. The funds were then laundered through platforms like Haowang, Xinbi, and other dark market operations.

But it’s not just digital theft that’s spiking. Crypto is increasingly being used to fund traditional crimes, including kidnappings and extortion. On May 13, a kidnapping attempt in Paris involving the daughter and grandson of Paymium’s co-founder highlighted how criminal networks are financing real-world violence through crypto.

In that case, three masked men attempted to abduct the victims in broad daylight, demanding a crypto ransom. The attack was thwarted by bystanders, but the incident underscores the growing convergence of cyber and physical crime, with crypto serving as the common thread.

Haowang’s Legacy: A Network That Refuses to Die

Despite the successful takedown of Haowang and Xinbi, the battle is far from over. According to Elliptic, over 30 similar marketplaces remain active on Telegram, serving as conduits for illicit crypto transactions, ransomware payments, and money laundering.

Moreover, the U.S. Treasury’s FinCEN has issued a warning about Huione Group’s continued activities, proposing a ban on the conglomerate’s access to the U.S. financial system. However, enforcement is complicated by Huione’s extensive network of shell companies and anonymous wallets, which allow it to quickly rebrand and resume operations under new identities.

For now, the Haowang crackdown represents a rare victory against crypto crime, but as authorities move to dismantle these networks, criminals continue to adapt and evolve, leveraging the inherent anonymity of crypto to evade detection and prosecution.

As the game of cat and mouse continues, the question remains: Can law enforcement keep up with the rapid evolution of crypto crime? Or are they merely buying time before the next Haowang emerges?