A Shanghai court sentenced five defendants to prison terms of two and a half to six years for operating an illegal foreign exchange network that used crypto to transfer more than $29.4 million abroad, the Shanghai Jing'an District People's Procuratorate disclosed. The group helped domestic clients bypass China's foreign exchange controls by moving over 200 million yuan through crypto channels over three years. China's State Administration of Foreign Exchange flagged the operation in July 2024 after detecting unusual transactions tied to a company.
Court Imposes Prison Terms and Fines on Five Defendants
The five defendants received prison terms ranging from two and a half to six years and fines ranging from 300,000 yuan ($44,150) to 1.5 million yuan ($220,780). Authorities arrested nine people in connection with the case. Prosecutors said the group targeted wealthy clients seeking overseas funds for property purchases, emigration, or education abroad.
One defendant surnamed Gao processed more than 170 million yuan (about $25 million) in illegal transfers before leaving the company to start a separate currency conversion business. Regular agents helped recruit additional clients for the cross-border operation.
Prosecutors Identify On-Chain Evidence Collection Challenges
The Shanghai Jing'an District People's Procuratorate wrote in its post that in cross-border cases involving crypto assets, electronic evidence is central to conviction and also the easiest to lose. Prosecutors said the group used the characteristics of on-chain transfers to make fund flows harder to trace and more difficult to collect as courtroom evidence.
SAFE Reports 400+ Foreign Exchange Investigations in H1 2025
SAFE reported that it investigated more than 400 foreign exchange cases in the first half of 2025 and penalized more than 180 underground banking operations during the same period. China has called for tighter action against stablecoins such as USDT, which regulators say function as a de facto channel for unauthorized yuan-to-foreign-currency conversion.
The People's Bank of China has listed virtual currency laundering and underground banking among its key anti-money laundering priorities.
FAQ
What did the Shanghai court sentence the defendants for?
The Shanghai court sentenced five defendants to prison terms of two and a half to six years for running an illegal foreign exchange network that used crypto to transfer more than $29.4 million abroad, bypassing China's foreign exchange controls.
How much money did the group transfer through crypto channels?
Prosecutors said the group helped domestic clients transfer more than 200 million yuan, or about $29.4 million, abroad using crypto over three years.
What evidence challenges did prosecutors highlight in the case?
The Shanghai Jing'an District People's Procuratorate stated that in cross-border cases involving crypto assets, electronic evidence is central to conviction but also the easiest to lose, as the group used on-chain transfer characteristics to make fund flows harder to trace and collect as courtroom evidence.
