The People’s Court in China delivered the verdict on November 8, citing his unauthorized sharing of confidential state information with foreign intelligence agencies in exchange for over one million yuan in cryptocurrency.

Wang Moumou, a relatively unknown civil servant, initially made headlines after his crypto investments took a drastic turn, leaving him with substantial financial losses. Unable to repay his debts, Wang turned to an online forum in a desperate bid to find supplemental income. Notably, he hinted at his access to sensitive government information, which reportedly attracted the attention of foreign agents.

The agents contacted Wang with an enticing proposal—payment in exchange for state secrets. Driven by financial necessity, he accepted the offer, initially sharing minor information but eventually escalating to more critical state secrets. This arrangement allowed Wang to amass a significant sum in cryptocurrency – and his actions caught the eye of Chinese national security officials.

Security Gaps and Loopholes Exploited

Wang’s espionage was facilitated by weak security protocols in his workplace. Regulations in China mandate stringent controls over sensitive information, including registering, counting, and signing off classified documents. However, Wang’s office failed to enforce these standards, making it easy for him to access and disseminate confidential materials without raising alarms. Investigators later discovered numerous classified files on his computer, evidencing his misuse of his position and disregard for security protocols.

In response, the National Security Agency ordered Wang’s department to enhance its confidentiality measures and enforce stricter oversight, underscoring the serious breach of security protocols that allowed such a case to unfold.

Chinese law imposes severe penalties for espionage, with sentences ranging from ten years to life in prison. Wang’s life sentence and the stripping of his political rights align with these strict regulations, reflecting China’s zero-tolerance stance on security breaches. Additionally, the incident highlights a growing concern about digital assets being used in covert operations, despite the country’s official ban on cryptocurrency trading.

Wang’s case joins a list of recent crypto-related criminal prosecutions in China. Recently, authorities extradited Zhang Moumou, the mastermind behind a $14 billion crypto pyramid scheme, under the China-Thailand Extradition Treaty. Moreover, Taiwan has also reported espionage cases funded by cryptocurrency, with several military personnel convicted of selling secrets to Chinese intelligence agents in exchange for digital payments.

Crypto in China: A Contradictory Landscape

While China continues to maintain a strict stance on cryptocurrency domestically, regions like Hong Kong are increasingly embracing crypto-related opportunities. With Hong Kong dreaming of becoming the world’s Web3 hub, volumes of Bitcoin ETFs traded exploded lately. “The developments in the U.S. crypto space are likely to have an impact on Hong Kong’s policy decisions,” said Livio Weng, chief executive of Hong Kong-based HashKey Exchange.

On the contrary, crypto firms have been forced to flee to other countries due to mainland China’s restrictions, which, according to some experts, is against the Chinese economic interest. Observers indicate that rigid crypto regulations in China may be driving away potential tax revenues from foreign countries to exercise the economic benefits of innovation in digital assets.

Wang’s conviction underscores the intersection of cryptocurrency and national security, an area drawing increasing scrutiny worldwide. As digital assets gain popularity, their use in covert operations poses unique challenges for national security agencies. In response, Chinese authorities are urging citizens to report suspicious activities related to the sale of state secrets and are calling for enhanced vigilance regarding the potential misuse of cryptocurrency in espionage.