Haowang Guarantee's shutdown only a limited setback for crypto scams, Chainalysis says

Haowang Guarantee, also known by former name Huione Guarantee, announced its shutdown last week due to restrictions imposed by Telegram. Haowang operated a non-KYC, Telegram-based marketplace where third-party vendors sold technology, personal data and money laundering services, effectively serving as a one-stop shop for crypto scammers and other illicit cyber actors.

Telegram's action came after FinCEN designated its parent Cambodian conglomerate Huione Group as a money laundering enterprise and proposed sanctions on the group for its ties to North Korean cyber criminals. The messaging platform also shut down accounts to Xinbi Guarantee, a marketplace known as second largest next to Haowang.

The closure of Haowang was presented as a pivotal development that could thwart the global crypto scam network. However, Chainalysis pointed out that Haowang's shutdown did not effectively eradicate the problem as scammers quickly adapted to using other "guarantee" services.

"These services are likely designed for redundancy, speaking to the resilience of criminals and the lucrative nature of their businesses," Chainalysis said in its Monday report. 

Chainalysis explained that while Haowang was the most prominent, numerous other services continue to provide platforms where crypto scammers can obtain criminal infrastructure from vendors, who often operate across three or four different marketplaces.

"Vendors migrate, new services fill the void, and users adapt quickly," said Chainalysis. "For now, the Huione Group takedown may shift some traffic, scramble broker relationships, or inspire short-term caution, but the structural enablers of crypto crime unfortunately remain intact."

Even with measures taken by Telegram, the messaging platform persists as the primary hub for guarantee services. This is due to its built-in pseudonymity, ease of access, and a fundamental design that makes it difficult for the app to monitor chats for legal investigations.

Following an earlier inquiry from The Block, a Telegram representative said scams and money laundering activities on the app are "always removed whenever discovered." The platform did not provide details on what measures they have in place to sanction other services like Haowang.

"Still, the removal of Huione and Xinbi accounts from Telegram following FinCEN's action suggests that even Telegram's permissiveness has limits," Chainalysis said.

Chainalysis noted that conventional platform takedowns are increasingly ineffective, and risk monitoring should shift to tracking illicit transaction behaviors on a case-by-case basis, judging by patterns and behaviors in on-chain flows and activities.