Shanghai police have uncovered a major underground banking case that allegedly used cryptocurrency to facilitate illegal cross-border foreign-exchange transactions, according to a report by The Paper cited by BlockBeats on Aug. 27.
At a news conference held the same day, the Shanghai Municipal Public Security Bureau said police in the city have cracked multiple illegal business and money laundering cases involving virtual currencies since the start of this year, arresting more than 70 suspects in cases involving more than 20 billion yuan.
Online patrol led investigators to the case
Police said the economic crime investigation unit discovered online promotions for exchange services during internet patrols in January 2026. After a broader review, authorities determined the activity was suspected of involving economic crimes and formally opened an investigation.
Suspects allegedly used crypto as the settlement medium
Investigators found that since August 2024, suspects identified as Liu, Xu, Gao and Wang, among others, had allegedly sought illicit profits by offering exchange services without approval from state authorities. Police said the group used cryptocurrency as the settlement vehicle, recruited clients with foreign-exchange demand through both online and offline channels, matched domestic and overseas funds through crypto transfers, illegally completed conversions between renminbi and foreign currencies, and charged service fees based on a set proportion.
According to police, the operation followed a "renminbi - virtual currency - foreign currency" conversion path. After clients transferred renminbi into accounts controlled by the group, the suspects allegedly coordinated with crypto merchants to purchase virtual currencies, sold those assets through overseas channels in exchange for foreign currency, and sent the proceeds to overseas accounts designated by clients.
Clear division of roles inside the group
Police said the group had a clear structure and defined responsibilities. Liu allegedly handled client demand, contacted crypto merchants and issued transfer instructions. Xu, Gao and others were responsible for recruiting individuals to open bank accounts in batches for collecting and moving exchange funds. Wang allegedly handled the accounts involved in the case and transferred client funds.
Police launched phased takedowns in April
After gathering what authorities described as detailed evidence, Shanghai police began phased arrest operations in April 2026 and detained 19 suspects.
Five suspects approved for arrest
At present, five suspects, including Liu, Xu, Gao and Wang, have been formally approved for arrest by prosecutors on suspicion of illegal business operations and assisting information network criminal activity. Other suspects have been placed under criminal compulsory measures, and the case is still under further investigation.