Authorities in China have strengthened their resolve to crack down on Web3 and artificial intelligence (AI) crimes following a spike in offenses from both sectors.
Jingeng Sun, an executive at China’s Network Security Bureau, confirmed the government’s stance to heighten monitoring of the industries in the wake of increased financial crimes. Sun was speaking at a press conference hosted by the country’s Ministry of Public Security with key stakeholders in attendance.
Sun pointed out that bad actors are using generative AI tools to defraud the public while others are using digital currencies to cover the money trail of illicit funds. Chinese authorities confirm a spike in impersonation and phishing scams and malware, such as using Trojan viruses to steal funds.
“We have been monitoring the use of ChatGPT, cloud computing, blockchain, deep fake AI, and other new emerging technologies, new applications, and new organizations in these incidents,” Sun said. “We will strike hard at such methods as we research their use.”
Chinese authorities have been cracking down on digital currency offenses, most recently busting a USDT money laundering syndicate in July. Law enforcement said the syndicate operated by buying USDT at a discount and selling them at marked-up prices to cybercriminals violating existing bans on digital currencies.
In 2021, China imposed a blanket ban on digital currencies, criminalizing all transactions for the asset class, leading to a mass exit of service providers.
Despite the increased crackdown, critics have taken swipes at the Chinese police for embezzling digital currencies from local projects. They point to the sudden liquidity crisis faced by Multichain after the arrest of the project’s CEO by police as on-chain investigators point to converting assets into stablecoins.
Sun’s speech indicates authorities will split resources to investigate and prosecute AI-related offenses. In May, police in Gansu province arrested an individual for using ChatGPT to generate and spread fake news.
Earlier this year, the government issued the “Administrative Provisions on Deep Synthesis for Internet Information Service” as a guiding framework designed to promote the safe usage of novel technologies.
The tight lid on AI development
As AI develops quickly, Chinese authorities are keen on rolling out newer guardrails to ensure innovations align with the country’s objectives.
Led by the Cyberspace Administration of China (CAC), AI firms in China may have to seek licensing to launch generative AI systems. Proposed rules suggest that generative AI should not be used to “subvert state power, advocate the overthrow of the socialist system, incite splitting the country, or undermine national unity.”
The Chinese government has banned OpenAI’s ChatGPT from the country, throwing its weight behind developing local alternatives from Alibaba (NASDAQ: BABAF) and SenseTime (NASDAQ: SNTMF).
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