Bitcoin, a type of cryptocurrency Illustration: VCG

China's top law enforcement agencies are investigating crypto trading exchanges and mining activities, and exploring specific ways to convict and sentence those involved in illegal activities, according to media reports on Tuesday, following the country's broad and strict ban on crypto transactions in September.

Caijing Magazine quoted sources close to the matter as saying in a report that after the investigation is completed, further legal explanations will be issued by the Supreme People's Court and the Supreme People's Procuratorate at a "proper time."

Several industry insiders told the Global Times that the ban issued by the People's Bank of China (PBC), the country's central bank, is guidance-oriented, but when it comes to how to investigate and prosecute relevant cases, the law enforcement agencies need specific rules and laws.

"While crypto mining by its very nature violates the law, all crypto-related platforms and their employees are subject to criminal penalties, and may be sentenced to jail, if they continue to provide services to Chinese mainland users. This is a deadly blow to the crypto industry," an industry insider, who spoke on condition of anonymity, told the Global Times on Tuesday. 

The insider said that some senior executives and employees of major crypto exchanges have fled abroad in recent days, and others may follow. 

Another industry insider, who also prefers not to be identified, told the Global Times on Tuesday that some crypto exchanges have terminated contracts with many Chinese employees since last year to minimize the potential impact of Chinese regulators' stepped-up crackdown on the industry. 

Also, some exchanges spun off their businesses not related to crypto exchanges, such as blockchain gaming, in an effort to draw a clear line between business that is compliant with the law and illegal crypto trading.

Almost all Chinese crypto exchanges have moved their bases overseas in recent years, after regulators banned Bitcoin exchanges after regulatory actions in September 2017.

The Global Times reported earlier that more than 20 major firms involving cryptocurrency businesses, including trading exchanges, crypto mining and crypto information platforms such as Huobi and Ethereum mining pool Sparkpool, have suspended services to Chinese mainland users and announced plans to exit the market.

Their exits mean that more than 90 percent of crypto-related businesses have shut down in China, industry observers said.