Police in Kenya say they are holding 77 Chinese nationals who are accused of running a cyber crime network and mysterious "command centre" from upmarket houses in the capital Nairobi.
Kenya's foreign ministry also summoned China's top diplomat in Nairobi as it sought to establish if Beijing was in anyway linked to the affair.
Local police said they believed the gang was "preparing to raid the country's communication systems".
The Daily Nation newspaper said a series of raids turned up equipment capable of infiltrating bank accounts, Kenya's M-Pesa mobile banking system and ATMs.
"The suspects are being interrogated to establish their mission in the country and what they wanted to do with the communication gadgets," director of Kenya's criminal investigation department Ndegwa Muhoro said.
"They have been charged in court."
Police said many of those detained appeared to be in the country illegally.
"We want to do a thorough investigation over the matter and we are currently working on their travel documents," police spokeswoman Zipporah Mboroki said.
A detective close to the case said the raids were sparked after police began investigating a house fire that left one person dead.
The source said the charges levelled against the 77 so far included "being in the country illegally and operating radio equipment" without the necessary permits.
According to the Standard newspaper, the Chinese nationals were living in "military-style dormitories".
Kenya's communications minister Fred Matiang'i said China promised to fully cooperate in the investigation.
"China promised to send investigators to work with ours on this matter," Mr Matiang'i said, adding the case "is being investigated by the police working closely with the foreign ministry".
The Standard said preliminary investigations showed the group were making microchips for ATM cards and that they also "ran a command centre whose activities are yet to be established".