Police in central China have shut down a hacker training company, according to media reports.
The operation is reported to have taught thousands of people how to launch cyber attacks and also provided them with spy software.
The reports come amid growing accusations of organised computer hacking originating from China.
Police in Hubei province shut down Black Hawk Safety Net and arrested three peopleaid.
China's 'biggest hacker training website' openly offered downloads of hacker tools and trojan software to 12,000 VIP members and 170,000 others who had registered for free membership.
The Legal Daily newspaper said on its website that the company was shut down in November and that police had frozen assets and confiscated nine web servers, five computers and a car.
Black Hawk Safety Net was founded in 2005 and headquartered in Xuchang city in Henan province, which neighbours Hubei.
The China Daily quoted anonymous Black Hawk Safety Net members saying users learned how to hack into the financial accounts of others and steal funds.
The reports said authorities began investigating the company last year after finding evidence that three of its customers were involved in a 2007 cyber attack that disrupted web services in the Hubei city of Macheng.
Google said in January it would no longer abide by Chinese government censorship and was mulling leaving the country with the world's largest number of online users, citing cyber attacks on it and more than 20 other companies.
Google said the attacks appeared to be aimed in part at the email accounts of activists dealing with Chinese human rights issues and appeared to have originated from China.
The Chinese government has denied any involvement in the cyber attacks.
The Google row has added to tension between Beijing and Washington on a range of other issues including trade, US arms sales to Taiwan and Tibet.
