Shanghai's Hongkou District police have cracked a case involving the use of virtual currency for illegal cross-border settlement and illegal foreign exchange trading, ChainCatcher reported. Nine suspects were arrested, and the amount involved exceeded 200 million yuan.
Two platforms were allegedly used to run cross-border exchange and settlement services
According to the report, a group led by a suspect surnamed Li began operating from early 2024 for незаконные profits by setting up a technology company and building two online platforms, one called "Cross-Border Fund Exchange" and the other "Virtual Credit Card Issuance and Settlement." The group allegedly solicited customers both online and offline and illegally carried out exchange and settlement services involving virtual currency and cross-border funds.
The suspects allegedly profited by charging transaction fees, consumption service fees, card issuance fees, and withdrawal fees.
Police described the platforms as a closed-loop illegal financial service system
Investigators said: "What makes this case unusual is that the criminals developed two apps and openly solicited customers on such a large scale, something we had not seen before. The platforms built in this case were themselves a closed-loop illegal financial service system, with all transactions settled within the platforms. This model of crime was larger in scale, involved a longer chain, and was more deceptive."
How the two businesses allegedly operated
In the "Cross-Border Fund Exchange" platform, the group allegedly collected customers' virtual currency overseas, converted it into foreign currency to form a "capital pool," and then used fabricated contracts and other methods for cross-border foreign exchange settlement, enabling the conversion and transfer between virtual currency and renminbi.
In the "Virtual Credit Card Issuance and Settlement" platform, the group allegedly "cooperated" with multiple overseas private banks to issue virtual credit cards to customers. Customers could use the cards for spending, but repayment had to be settled in virtual currency. The group then allegedly converted the virtual currency into foreign currency overseas and completed settlement with overseas card providers through false cross-border foreign exchange settlement arrangements.