Many cases involving USDT, over-the-counter trading and cross-border currency exchange do not begin with the broad label of “crypto crime.” They start with a bank card that is suddenly frozen.
In an article published by TechFlowPost, Mankun writes that many traders and family members struggle to understand why someone who only helped a friend exchange a few batches of U and earned a small spread could end up being investigated for illegal business operations, concealing or disguising criminal proceeds, or even money laundering. The article says the key issue is usually not whether the person bought or sold USDT, but what the overall transaction ultimately accomplished.
One example described in the piece is a client paying renminbi inside China, after which the trader transfers USDT to an offshore wallet and an overseas partner delivers U.S. dollars, Hong Kong dollars or other foreign currency to a person designated by the client. The reverse structure also appears: someone offshore first pays foreign currency, and a person in China then sends renminbi to a specified domestic account. On the surface, the steps look like buying U, transferring U and selling U. In functional terms, however, the client has completed a conversion between renminbi and foreign currency outside China.
The article argues that this is the real issue in USDT-linked foreign-exchange cases. A person who occasionally disposes of crypto held for personal purposes is not in the same position as someone who repeatedly handles collection, payout, settlement and cross-border exchange for others. In that framing, criminal risk usually does not begin with “holding USDT.” It begins when someone starts solving another person’s problem of how money inside China gets offshore, or how foreign currency is turned into renminbi.
How USDT can be used as an exchange tool
According to the article, traditional underground banks engage in illegal exchange between renminbi and foreign currencies. In a USDT setting, the form changes, but the settlement function may remain the same.
One common structure involves converting renminbi inside China into foreign currency outside China. A client first pays renminbi domestically to a U dealer or intermediary. The dealer then transfers the corresponding amount of USDT to an offshore wallet, and an overseas partner pays dollars, Hong Kong dollars or other foreign currency to the client or to a person designated by the client. No renminbi is directly remitted abroad, and no overseas dollars are directly wired into China. Even so, through domestic renminbi payment, an on-chain USDT transfer and offshore delivery of foreign currency, the client ends up converting renminbi into foreign currency.
The reverse route works in a similar way. After an overseas party receives dollars or another foreign currency, that party transfers USDT to an intermediary in China, who then pays renminbi into a designated account. A bank may not see a conventional cross-border remittance, but the value conversion between renminbi and foreign currency has already been completed through domestic and offshore accounts together with on-chain assets.
The article cites a 2019 judicial interpretation issued by China’s top court and top procuratorate on criminal cases involving illegal payment settlement and illegal foreign-exchange trading. It says buying and selling foreign exchange for profit, or engaging in disguised foreign-exchange trading that disrupts financial market order, can be punished as the crime of illegal business operations when the circumstances are serious. The Supreme People’s Court also said in related comments that cross-border fund settlement through an onshore-offshore “matching” structure is a typical form of disguised foreign-exchange trading.
For that reason, the article says judicial authorities in USDT-linked exchange cases do not simply accept labels such as “buying coins” or “selling coins.” They look through the structure to determine whether USDT was used to complete cross-border conversion between renminbi and foreign currency. Whether USDT itself is foreign exchange is not the only point. The more important question is whether it was used to carry out illegal exchange and cross-border settlement.
Buying and selling USDT does not automatically amount to a crime
The article notes that on Feb. 6, 2026, the People’s Bank of China and seven other departments issued Yinfа [2026] No. 42, further stating that virtual currencies such as bitcoin, ether and Tether do not have the same legal status as fiat currency. It also kept domestic business activities involving exchange between fiat currency and virtual currency, exchange between virtual currencies, and information intermediation and pricing services for virtual-currency trading within the scope of strict prohibition and enforcement.
Still, the piece says regulatory bans on virtual-currency-related business activity do not mean that anyone who has personally held, transferred or sold USDT automatically commits a criminal offense. Criminal liability still requires case-by-case analysis.
The article lists several issues that need to be examined: whether the person was occasionally disposing of personal crypto assets or was operating an exchange business for unspecified clients over time; whether customers were actually buying USDT or were really seeking the end result of turning renminbi into offshore dollars; whether the person earned a normal market spread or charged fees and channel costs based on settlement amount; and whether the transaction reached the monetary and factual thresholds required for criminal prosecution.
Under the 2019 judicial interpretation cited in the article, “serious circumstances” can be found where the illegal business amount reaches more than 5 million yuan, or illegal gains exceed 100,000 yuan, in cases involving illegal payment settlement or illegal foreign-exchange trading. “Serious circumstances” can also be found where the illegal business amount exceeds 2.5 million yuan, or illegal gains exceed 50,000 yuan, together with one of several additional conditions, including prior criminal punishment for the same type of conduct, administrative penalties for similar conduct within two years, refusal to explain where the funds went or refusal to cooperate in recovery that prevents recovery of illicit funds, or other serious consequences.
The article says a USDT trade should not be assessed solely by asking whether U was bought or sold. Authorities will also look at transaction function, business-like characteristics, amount involved, illegal income, and the person’s role in the full chain.
Four dimensions the article says matter most
The piece says that two transactions both described as “buying and selling U” can be treated very differently. In one case, a person may only need to explain the source of incoming funds after a bank card is frozen because it received money linked to fraud. In another, the person may be investigated as part of an illegal foreign-exchange channel, a money-muling platform or an underground bank. The difference often lies not in the token itself, but in the function the person actually performed.
1. Personal assets or other people’s money
Selling one’s own USDT on an occasional basis is very different from taking orders through chat groups, social feeds or platforms and repeatedly collecting funds, releasing coins, routing money and arranging settlement for different clients.
If a person continually uses multiple bank cards, exchange accounts and wallet addresses to receive funds from different individuals and then sends coins to third parties or offshore wallets based on instructions from others, the article says the conduct starts to look less like personal asset disposal and more like operating an exchange service or payment channel.
2. Buying USDT or buying a cross-border payout result
In a standard crypto trade, the customer’s direct purpose is to obtain a certain amount of USDT and then decide independently how to hold or use it.
In an exchange-style transaction, however, what the customer often cares about is not the token’s market price or quantity, but whether renminbi can turn into dollars offshore, or when offshore funds can arrive inside China. If the trader not only sells U, but also arranges for overseas personnel to deliver foreign currency, designates domestic collection accounts, coordinates payment timing, splits funds or confirms final receipt, the article says the trader is no longer just completing an ordinary virtual-currency trade. The trader is participating in a cross-border settlement path.
3. Market spread or channel fees
Ordinary trading can produce a spread because of market price movement. But where a person charges a fixed point based on the exchange amount, or takes fees, commissions or rebates tied to whether money successfully arrives, that income looks more like a channel fee than a normal trading spread in the virtual-currency market.
The article adds that returns obviously higher than market levels may prompt investigators to examine the authenticity of the transaction and the person’s state of knowledge more closely.
4. Multi-party, multi-card, onshore-offshore matching structures
In a normal trade, it is usually possible to explain the relationship between the buyer, the payer, the recipient of the coins and the ultimate beneficiary. In higher-risk transactions, the structure often looks different: onshore party A pays renminbi while offshore party B receives USDT, or offshore party C pays dollars while onshore party D receives renminbi.
When the payer, payee, buyer, wallet holder and ultimate beneficiary are repeatedly different people, and the chain also includes introducers, bank-card holders, runners and overseas partners, the article says the longer and more fragmented the chain becomes, the easier it is for authorities to view it as the kind of onshore-offshore matching and settlement used by underground banks.
It also says that repeatedly changing receiving accounts, asking for payments to be split, telling clients not to include memo text, using another person’s bank card, asking for a supposedly “clean card,” or continuing to trade after repeated card freezes or platform risk-control alerts may all be treated as indicators of abnormality and possible knowledge.
Risks go beyond illegal exchange when fraud or gambling funds are involved
The article says USDT OTC trading becomes more complicated because the money involved often intersects with upstream crimes such as telecom fraud, online gambling and laundering through money-muling schemes. Once fraud-related or gambling-related funds enter a bank account, payment stop orders and freezes often follow quickly. To move the money, upstream actors may use large numbers of bank cards, cash, gold or virtual currencies to disperse, convert and transfer value across borders.
Because USDT can be transferred on-chain quickly, moved across borders conveniently and shifted between frequently changed wallet addresses, the article says it may be used to transfer or convert criminal proceeds. In that situation, U dealers, OTC intermediaries, bank-card providers and fund-routing personnel are exposed to more than just the risk of illegal business operations.
Concealing or disguising criminal proceeds
The article says the core of this offense is whether the person knew the property was criminal proceeds or derived from criminal proceeds, yet still helped conceal, transfer, acquire, sell on behalf of others or otherwise disguise or hide it.
It states that a new judicial interpretation that took effect in 2025 made clear that converting property into cash, negotiable instruments or securities, transferring funds through bank transfers or other settlement methods, and transferring assets across borders may all fall within concealment or disguise. Authorities should assess knowledge by looking at the information the person had access to, the transaction method, abnormalities in accounts, professional background, relationship with upstream actors, and statements or explanations given in the case.
For that reason, the article says receiving fraud-linked funds into an account is not by itself enough to directly infer a crime. But if there are signs such as clearly abnormal pricing, frequent third-party payments, large inflows and outflows over short periods, continued trading after repeated card freezes, or prepared scripts for dealing with investigators, criminal risk rises sharply.
The Supreme People’s Court and the Supreme People’s Procuratorate have also stressed, according to the article, that “knowledge” in this offense should be strictly determined according to law and not inferred lightly, so that criminal enforcement is not expanded improperly based only on abnormal funds or an account freeze.
Assisting information network crime
The article says this offense focuses on whether a person knew that others were using information networks to commit crimes, yet still provided payment settlement, accounts, technical support or other assistance.
In crypto-related cases, the risk does not come from merely giving someone a wallet address. It comes from whether bank cards, payment accounts, exchange accounts or virtual-currency conversion were actually used to provide a usable collection and transfer channel for upstream online crime.
The article adds that guidance issued in 2025 by the top court, top procuratorate and one ministry said “knowledge” in these cases must be judged by looking at the timing, method, frequency, tools used, whether regulation was evaded, illegal profits, and the person’s professional identity and cognitive ability. A person should not be held criminally liable on an objective basis simply because an account was provided or abnormal flows occurred.
Money laundering or complicity in the upstream offense
If a person knows that funds come from a specified upstream crime under the criminal law and still uses virtual currency to help convert or move those funds, or helps send the funds abroad, the article says that person may also face money-laundering risk.
If the person had prior collusion with upstream actors in fraud, online gambling or similar offenses, or had developed a stable working arrangement in which they followed instructions over time to collect money, move coins, allocate accounts and handle funds, the article says they may even be evaluated as a co-offender in the upstream crime.
As the piece puts it, the name of the offense cannot be determined by isolating one action. The full analysis must take into account timing, the person’s understanding of the funds, the relationship with upstream actors and the role played in the broader chain.
The article’s warning to ordinary investors
The article says ordinary investors most often misjudge risk when they mix personal cross-border needs with providing exchange services for others. Someone with genuine needs tied to overseas study, medical treatment, travel or real trade should use formal banking channels for foreign-exchange purchases and remittances, and keep records such as admission notices, tuition notices, contracts, invoices, customs declarations, logistics records and offshore receiving-account information.
But if a person starts handling funds for different clients over time, turning other people’s renminbi into USDT and arranging for overseas parties to deliver dollars, or converting USDT from offshore clients into renminbi paid into designated domestic accounts, or offering large, frequent, fee-based cross-border settlement to strangers under labels such as tuition payment, remittance to relatives and friends, or overseas investment, the article says it becomes very difficult to explain the conduct as a purely personal arrangement.
It gives several bottom lines for ordinary investors: do not collect and pay funds on behalf of strangers or unfamiliar clients; do not let others use your bank cards, payment accounts, exchange accounts or wallets to route funds; do not publicly post ads in chat groups or social feeds saying you buy U, sell U, handle large exchange orders or provide cross-border receipt; and do not get involved in transactions whose source of funds and purpose you cannot explain merely for a small spread or handling fee.
The real issue to watch, the article says, is not a one-off rise or fall in a token’s price, but whether you are becoming a fixed interface in someone else’s money chain.
After a freeze, summons or investigation, sort out four records first
The article says that once a crypto-related transaction enters criminal procedure, family members often ask whether buying and selling U is automatically a crime and whether it is enough to say the person did not know the funds were problematic. The more useful response, it argues, is not to debate an abstract conclusion first, but to reconstruct the transaction facts in full.
1. A role chart
This should clarify whether the person was an ordinary buyer, seller, U dealer, intermediary, bank-card provider, fund router, offshore contact or organizer; whether the participation was occasional or sustained; and whether the person handled pricing, customer sourcing, account arrangement, fund allocation or contact with offshore personnel.
2. A fiat-and-coin flow chart
This should identify which account the renminbi came from and where it went, which wallet the USDT came from and which address ultimately received it, whether the payer, buyer, coin recipient and ultimate beneficiary matched, and whether there were third-party payments, split payments, cash handovers, onshore-offshore matching or collection-and-payment on behalf of others.
3. A profit chart
This should show whether the person earned a normal market spread or instead took fees, commissions, rebates or channel charges, whether the return was clearly above ordinary market levels, and whether a fixed point was charged based on settlement amount.
4. A communications and risk-warning chart
The article says people should organize chat records, group notices, order notes, platform risk-control alerts, bank freeze notices, counterparty identity information and any indication that the person had been warned funds might be tied to fraud or gambling. Subjective knowledge cannot be proved or disproved with a single statement. At the same time, the article says, abnormal transactions alone should not be used to make a finding without looking at other evidence.
If the transaction had a genuine purpose, the article says materials relating to overseas study, medical treatment, trade, wage income, contracts, invoices, customs and logistics, and offshore account statements should also be collected to explain the purpose of the trade and the source of the funds.
If a bank card freeze, exchange account freeze, police summons or formal case filing has already occurred, the article says the person should quickly preserve bank statements, exchange order history, wallet addresses, on-chain transaction hashes, chat logs, counterparty identity information, pricing and profit methods. It cautions against trying to summarize everything with the sentence “I was only trading coins normally,” and says it is also unwise to delete chat history, contact related trading participants, sign written explanations or make restitution commitments before understanding the nature of the case, the amount involved and the origin of the funds, because that can lead to loss of evidence or conflicting statements.
The article’s conclusion
The piece ends by saying that USDT is only a tool. What creates criminal risk is its use to bypass foreign-exchange controls, complete cross-border settlement, transfer criminal proceeds or conceal the source of funds.
In USDT-related criminal cases, the analysis still comes back to people, money, coins and evidence: whether the person dealt with personal assets or other people’s funds; whether the conduct was a one-off transaction or a long-term exchange channel; whether the income was a normal spread or a foreign-exchange handling fee; whether counterparties, source of funds, wallet addresses and final destinations can be explained; and whether trading continued after obvious abnormalities and risk warnings appeared.
The article adds that when someone is already being investigated over USDT trading, OTC transactions, cross-border exchange, frozen bank cards, illegal business operations, concealing or disguising criminal proceeds, assisting information network crime or money laundering, the first step is not to search online for a simple answer of guilty or not guilty. The first step is to sort out transaction roles, renminbi fund flows, on-chain coin flows, account relationships, chat records, transaction hashes and profit methods as quickly as possible.
At the end of the article, the author says the Mankun criminal defense team has long handled matters involving virtual currency, OTC trading, cross-border settlement, frozen cards, illegal business operations, concealing or disguising criminal proceeds, assisting information network crime and money laundering, and can help clients and families assess whether conduct is better understood as personal asset disposal, professional U-dealer activity, illegal foreign-exchange dealing or a channel for tainted funds. The article closes by saying the boundary in crypto-related criminal cases is always hidden in the concrete facts, and that the sooner the relationship among people, money, coins and evidence is clarified, the better the chance of arguing for an accurate case characterization and allocation of responsibility.