Hong Kong police arrested 12 people involved in a cross-border money laundering scheme that relied on crypto and over 500 stooge bank accounts to launder HK$118 million ($15 million), local news outlets reported.

The syndicate was dismantled on May 15, resulting in the arrest of nine men and three women in mainland China and Hong Kong.

The suspects allegedly recruited others to open bank accounts to receive proceeds from fraud cases, which were then converted into crypto at crypto exchange shops to launder the illicit funds, Hong Kong Commercial Daily reported on May 17.

The criminal organization rented a residential unit in the Hong Kong neighborhood of Mong Kok to plan and carry out its money laundering activities. Of the $15 million laundered, more than $1.2 million was linked to 58 reported fraud cases.

Caught in action

The bust followed police surveillance on May 15, when two recruits left the syndicate’s Mong Kok base — one visiting a bank, the other an ATM — before both went to convert the cash into crypto at a crypto exchange shop in the neighborhood of Tsim Sha Tsui.

Police arrested both individuals on the spot, seizing around HK$770,000 ($98,540) in cash before the funds could be laundered. The other 10 individuals, aged between 20 and 41, were arrested soon after.

Police seized approximately HK$1.05 million ($134,370) in cash, over 560 ATM cards, multiple mobile phones, bank documents and records related to crypto transactions.

Senior Inspector Tse Ka-lun of Hong Kong’s Commercial Crime Bureau claimed that the individuals often used bank accounts from their friends and family to launder the stolen funds. 

Hong Kong reported a 12% year-on-year increase in fraud reports in 2024, with authorities making more than 10,000 fraud-related arrests. Of those arrests, around 73% involved individuals who held stooge bank accounts.

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The crackdown comes as Hong Kong continues to roll out its crypto regulatory framework to support local innovation, protect consumers and establish itself as a crypto hub.

Hong Kong’s Securities and Futures Commission introduced new rules for crypto exchanges offering staking services in April. Two months earlier, the securities regulator rolled out a roadmap to improve market access, optimize compliance, expand product offerings, strengthen crypto infrastructure and foster relationships with industry players. 

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Public internet infrastructure is the critical speed and performance constraint on high-throughput blockchain networks, according to Austin Federa, co-founder and CEO of DoubleZero, a project developing high-speed fiber optic communication rails for blockchains.

“The downside of the public internet is it was never built for high-performance systems. It was always built for this sort of relationship of one big server talking to one little server,” Federa told Cointelegraph in an interview at Consensus 2025. The executive explained:

“We have validators all around the world. Rotating leader schedules all the time. And then they switch from having to be massive consumers of data to extremely massive broadcasters of data. So that means that they need huge amounts of resources both on ingress and egress.”

The executive added that the constraint posed by public internet infrastructure is now the limiting factor in blockchain performance and not compute power or software development.

Austin Federa giving a presentation on DoubleZero at Consensus 2025 in Toronto, Canada. Source: Cointelegraph/Vince Quill

Networks like DoubleZero will make blockchains faster, decrease spreads in decentralized finance (DeFi) trades, lower transaction fees, and open up new use cases for blockchain networks that were previously unavailable due to communication infrastructure constraints.

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DoubleZero co-founded by Austin Federa in 2024

Austin Federa left the Solana Foundation to establish the DoubleZero Protocol in December 2024. The goal of the project is to reduce latency, the time it takes for data to travel in a network, and bandwidth — the maximum data traffic a network can handle at once.

In April 2025, DoubleZero conducted a validator token sale to sell token purchase agreements to interested node operators seeking to become validators for the network.

The token sale was only available to accredited investors and already active validators on high-throughput blockchain networks including, Solana, Celestia, Sui, Aptos, and Avalanche.

Cover page for the DoubleZero whitepaper. Source: DoubleZero

DoubleZero’s team is aiming to launch its public mainnet in the second half of 2025, following a successful $28 million capital raise.

Federa told Cointelegraph that the increasingly high throughput of blockchain networks and the overall development of the industry has necessitated the building of dedicated, high-performance communication infrastructure to meet demand from increasingly sophisticated projects.

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Moody’s credit rating agency downgraded the credit rating of the United States government from Aaa to Aa1, citing the rising national debt as the primary driver behind the reduction in creditworthiness.

According to the May 16 announcement from the rating agency, US lawmakers have failed to stem annual deficits or reduce spending over the years, leading to a growing national debt. The rating agency wrote:

“We do not believe that material multi-year reductions in mandatory spending and deficits will result from the current fiscal proposals under consideration. Over the next decade, we expect larger deficits as entitlement spending rises while government revenue remains broadly flat.”

The credit downgrade is only one degree out of the 21-notch rating scale used by the company to assess the credit health of an entity.

An overview of the US national debt. Source: US National Debt Clock

Despite the negative short to medium-term credit outlook, Moody’s maintained a positive outlook on the long-term health of the United States, citing its robust economy and the status of the US dollar as the global reserve currency as strengths, reflecting “balanced” lending risks.

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Investors react to Moody’s US credit revision

Moody’s announcement drew mixed reactions from investors and market participants, leaving many unconvinced by the agency’s revised outlook.

Gabor Gurbacs, CEO and founder of crypto loyalty rewards company Pointsville, cited the rating agency’s previous credit assessments during times of financial stress as unreliable, signaling that the outlook was too optimistic.

“This is the same Moody’s that gave Aaa ratings to sub-prime mortgage-backed securities that led to the 2007-2008 financial crisis,” the executive wrote in a May 17 X post.

However, macroeconomic investor Jim Bianco argued that the recent Moody’s credit outlook does not reflect a real downgrade in the perception of US government creditworthiness and characterized the announcement as a “nothing burger.”

Interest rates on the 30-year US Treasury Bond spiked to nearly 5% in May 2025, signaling reduced long-term investor confidence in US debt. Source: TradingView

US government debt surpassed $36 trillion in January 2025 and shows no signs of slowing, despite recent efforts by Elon Musk and others to reduce federal spending and curtail the national debt.

As the debt climbs and investors lose faith in US government securities, bond yields will spike, causing the debt service payments to go up, further inflating the national debt.

This creates a vicious cycle as the government will have to entice investors with ever-greater yields to incentivize them to purchase government debt.

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