Background: Cross-Border Crypto Forex Ring Uncovered
According to the Shanghai Jing'an District People's Procuratorate, a defendant surnamed Li has been indicted for suspected illegal business operation (非法经营罪) in a case involving a criminal gang using virtual currency for cross-border 'pairing' (duiqiao) to illegally exchange foreign currency. The trial concluded on June 10, 2026, ending a series of cases spanning three years with an involved amount exceeding 200 million yuan (approx. $28 million). The case originated in July 2024 when the State Administration of Foreign Exchange (SAFE) detected abnormal clues during daily monitoring: Company Z was suspected of using virtual currency to transfer assets domestically for clients, leading to a referral to public security authorities.
Modus Operandi: Fake Private Bank with USDT Settlement
Investigation revealed that Company Z was registered overseas in 2019. It marketed itself as a 'private bank' and developed a virtual banking app to create a legitimate facade, but it never obtained a foreign exchange business license in China. The gang targeted high-net-worth individuals in need of foreign exchange for overseas property purchases, immigration, or education. They used intermediaries to attract clients, with dedicated account managers, traders, and customer service staff handling the exchange process. Clients purchased USDT (or other virtual currencies) from local crypto vendors using renminbi and transferred the tokens to Company Z's overseas virtual wallets. The gang then exchanged the virtual currency for foreign currency abroad and deposited it into the clients' designated overseas bank accounts. Throughout the process, no actual funds crossed the border; instead, separate domestic and overseas capital pools were used for settlement. Company Z charged a 3% service fee and paid 0.5% referral fees to intermediaries.
Legal Consequences: 5 Sentenced, 4 Non-Prosecuted
In total, nine individuals were apprehended, with one mastermind still under investigation. The procuratorate determined that the defendants jointly violated national laws by illegally buying and selling foreign exchange, disrupting financial order — a serious or particularly serious offense warranting prosecution for illegal business operation. The court sentenced five main defendants (including Gao and Li) to prison terms ranging from six years to two years and six months, with fines between 1.5 million yuan and 300,000 yuan. For the remaining four defendants (including Chen and Huang), due to their minor roles, relatively small amounts involved, and voluntary guilty pleas, the procuratorate exercised its discretion and did not prosecute.
Regulatory Signal: Crypto Cross-Border Forex Remains Enforcement Priority
This case underscores that even when using virtual currencies for cross-border fund transfers, involvement in illegal foreign exchange dealings risks severe criminal punishment. SAFE has integrated crypto cross-border 'pairing' into its routine monitoring, leveraging blockchain forensics to identify suspicious activity. For crypto industry participants, compliance risks must be carefully managed; any unlicensed foreign exchange operation — even if settled via stablecoins — remains illegal in China.