University Students' Crypto Job "Minefield": Minting and Pulling Pools = 4-Year Sentence, 6 Key Cryptocurrency-Related Criminal Charges to Avoid
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University Students' Crypto Job "Minefield": Minting and Pulling Pools = 4-Year Sentence, 6 Key Cryptocurrency-Related Criminal Charges to Avoid
Profit of 150 yuan, sentenced to 9 months in prison—don't treat the amount as insignificant.
Navigating Web3 tides with focused insightsAuthor: Wenser
The cryptocurrency industry has long been a dark forest, requiring not only defense against on-chain security threats but also vigilance against real-world legal repercussions. Particularly for young and inexperienced individuals, the criminal risk boundaries behind actions such as token issuance, OTC trading, and manipulating liquidity pools are often unclear.
To enhance risk awareness, Odaily Planet Daily has compiled typical domestic judicial cases involving cryptocurrencies in recent years, analyzing key legal risk points (Note: This article is for informational and educational purposes only and does not constitute legal advice; official interpretations prevail regarding specific provisions).
Charge One: Illegal Foreign Exchange Trading Constitutes Illegal Business Operations, Involving Over 200 Million RMB
A typical case released by the Supreme People's Court shows that Leshan Intermediate Court in Sichuan province heard a case involving illegal foreign exchange transactions using USDT.
Between 2020 and 2021, Wan Mouyuan and others conducted illegal foreign exchange trades via a "RMB—USDT—USD" method, involving over 234 million RMB. The court ruled this constituted the crime of illegal business operations. Principal offender Wan Mouyuan was sentenced to 13 years and 6 months in prison with a fine of 1.14 million RMB. Defendants Huang Mouyuan and Chen Mouwen were sentenced to 5 years and 6 months, and 2 years and 6 months respectively, with fines of 710,000 RMB and 250,000 RMB. After the first-instance verdict, defendants accepted the ruling without appeal, and the prosecution did not file objections; the judgment became legally effective.
Two additional cases also involved the crime of illegal business operations and are listed here:
First, in December 2022, Dabu County People's Court ruled on a cash-based virtual currency trading case, sentencing main offender Chen to eight months in prison with a 20,000 RMB fine, and accomplice Li to six months and ten days in prison with a 1,000 RMB fine. Illicit funds totaling 5,101,770 RMB were confiscated and turned over to the state treasury.
According to reports, in November 2021, Chen began cash trading of virtual currencies, purchasing USDT from retail investors he knew and reselling it for profit. Purchase prices were set by buyers who compared the price of one USDT against other virtual currencies each day to determine profitable rates. Due to large amounts of cash involved, Chen hired Li as a bodyguard to protect cash during transactions with retail traders. The court found that Chen and Li had effectively engaged in illegal foreign exchange trading through virtual currency transactions, constituting serious illegal business operations.
Second, three men born after 1995 used virtual currency trading as a medium for foreign exchange trading, completing over 650 transactions within months and exchanging nearly 30 million RMB worth of foreign currency. Prosecuted by Jianhu County People's Procuratorate, Lin and two others were ultimately convicted of illegal business operations and sentenced to between five years and one year and six months in prison, along with fines. Prosecutors determined that the trio used virtual currencies to provide cross-border payment and exchange services for profit, circumventing national foreign exchange regulations, undermining effective foreign exchange management and exchange rate stability, and disrupting financial market order, thus warranting criminal liability under the charge of illegal business operations.
Odaily Planet Daily Commentary: It is well known that China’s foreign exchange control regulations limit individual annual foreign exchange quotas to around 50,000 USD. The decentralized and anonymous nature of cryptocurrencies provides certain conveniences for foreign exchange handling and trading, thereby creating legal risks. The first case involved substantial amounts and a prolonged criminal period, making it a representative example cited for accurate legal application, proper judicial guidance, and significant precedent value. The second and third cases were similar but received lighter sentences, likely due to less severe circumstances.
Charge Two: Money Laundering, Bank Transaction Volume of 25,000 RMB, Illegal Gains Over 5,000 RMB
Liyang City People's Court in Jiangsu Province issued a ruling on July 26, 2024, in a virtual currency money laundering case. A man surnamed Wu, unemployed and using an alias, was sentenced to six months in prison, suspended for one year, and fined 2,000 RMB for participating in virtual currency money laundering activities.
The case revealed that in November 2023, Wu sought to repay credit card debts incurred during university from investments in forex and virtual currencies. He contacted a "money laundering company" via Telegram, bought USDT on trading platforms, then transferred and sold them through the "U-MATOU" app, profiting from price differences.
On December 22, 2023, Zhongguancun Police Station in Liyang received a report of fraud involving 3,830 RMB through a "task brushing" scam. Preliminary investigations showed 2,520 RMB was transferred into Wu’s bank account. His account recorded 13 transactions totaling over 25,000 RMB, with personal illegal gains exceeding 5,000 RMB.
Odaily Planet Daily Commentary: Money laundering remains a high-risk offense in the cryptocurrency sector, both domestically and internationally, regardless of scale or background. Individuals assisting illegal domestic or foreign companies in fund transfers via personal bank accounts are particularly prone to charges of aiding information network crimes.
Charge Three: Fraud – Post-00s College Student Issues Meme Coin, Immediately Removes Liquidity, Sentenced to 4.5 Years and Fined 30,000 RMB
Yang Qichao, a post-00s college student, issued a meme coin called BFF on BNB Chain. After removing liquidity and causing others to lose 50,000 USDT, he was convicted of fraud by the Nanyang High-tech Industrial Development Zone People's Court in Henan Province and sentenced to 4 years and 6 months in prison, with a 30,000 RMB fine.
On May 20, 2024, the case went to trial at Nanyang Intermediate People's Court. Yang’s defense lawyer maintained his innocence, arguing that the virtual currency had a unique and immutable contract address, ruling out counterfeit coins. Both defendant and complainant were experienced crypto players fully aware of speculative risks. Additionally, since the platform allowed free addition and removal of liquidity, the defendant’s actions did not violate platform rules. Moreover, after the incident, increased liquidity caused BFF holdings to appreciate in value—had the victim traded, they could have redeemed more USDT than initially invested—thus suffering no actual loss. Born in 2000, Yang was a senior student nearing graduation at a Zhejiang university when the incident occurred. In early May 2022, he noticed a community organization named Qudong Weilai DAO promoting a decentralized virtual token. He created a token named BFF matching the group's English name, adding 300,000 BSC-USD and 630,000 BFF into the liquidity pool. Within the same second Yang added liquidity, Luo purchased 85,316.72 BFF for 50,000 USDT. Just 24 seconds later, Yang removed all BFF liquidity, leaving Luo able to redeem only 21.6 USDT from 81,043 BFF. Tracing the transaction via a mutual WeChat contact, Luo identified Yang and demanded compensation, which Yang refused.
Luo filed a police report on May 3, 2022, claiming to have lost over 300,000 RMB (equivalent to 50,000 USDT) in a virtual currency investment scam. Authorities soon opened a criminal investigation for suspected fraud and arrested Yang in Hangzhou, Zhejiang, in November of that year.
Odaily Planet Daily Commentary: Yes, issuing tokens and pulling liquidity can strictly constitute a crime, especially when financial losses occur and the issuer can be clearly identified. According to insiders, Yang was a “professional rug-puller running phishing scams on-chain,” frequently launching and immediately draining pools under the guise of legitimate projects, earning him the label of a “habitual offender.” Previous reports even quoted perpetrators saying, “I'm just taking back what bigger players took from me—I've been scammed plenty myself.” Users are strongly advised to comply with domestic laws and avoid token issuance activities.
Charge Four: Organizing and Leading Pyramid Scheme Activities, Maximum Case Involving Over 210 Million RMB
In November 2024, according to the Yunnan Provincial People's Procuratorate's official account, the Shidian County Procuratorate prosecuted Li Moumou and nine others for organizing and leading pyramid scheme activities. After trial, the ten defendants were sentenced to prison terms ranging from six years to two years, with fines between 500,000 RMB and 100,000 RMB.
Since May 2021, Li Moumou colluded with Huang Mou, Jin Moumou, and others, using buzzwords like "blockchain" and "virtual currency" to illegally profit. Under the pretext of purchasing and holding virtual digital coin A and issuing coins B and C, they set up five funding pools on online platforms. Using offline events, WeChat groups, and other methods, they crafted images of successful entrepreneurs, leveraged special professional backgrounds, and promoted slogans such as “one coin, one mansion; one coin, one luxury car” and “earn hundreds of thousands easily per day,” aggressively advertising reward systems and profitability prospects. They lured the public into paying fees to join, destroy coins, or add funds to gain membership and complete assigned tasks, receiving static dividends and dynamic returns based directly or indirectly on recruitment numbers and investment amounts, forming five rebate tiers.
Appraisals confirmed that Li Moumou and associates collected cumulative pyramid scheme funds exceeding 210 million RMB via the online platform. The Shidian County Procuratorate concluded that Li Moumou, using virtual currency as bait and collaborating with nine others, defrauded money via internet platforms, severely disrupting economic and social order. With total pyramid funds exceeding 210 million RMB, their actions violated Article 224-1 of the Criminal Law of the People's Republic of China and constituted the crime of organizing and leading pyramid scheme activities. The court subsequently issued the above verdict.
In September of the same year, Zhongxiang City Procuratorate in Hubei Province prosecuted Chen Mou and two others for organizing and leading pyramid schemes. All three were sentenced to three years in prison, suspended for five years, with a 350,000 RMB fine. Police investigations revealed that Chen, Ding Moumou, and Fu Mou led a pyramid scheme aiming to profit from issuing a self-created virtual currency. They agreed on promotion models, reward systems, and profit-sharing mechanisms, then traveled elsewhere to commission Lu Moumou (handled separately), a software developer, to build a virtual currency app. The app launched in February 2022. On February 19, Chen and the others held a launch event, inviting friends to join the virtual currency project. Under the guise of investing in the project, they established a pyramid organization called “XX Community.” To boost promotion efficiency, they used internet platforms and held offline training sessions nationwide to advertise the project, recruiting members through “XX Community,” enticing them to invest in virtual coins to become members and recruit subordinates. According to prosecutors, Chen and others provided rebates to superiors based on subordinate recruitment numbers and payment amounts, forming hierarchical structures. Within months, the organization rapidly expanded. For easier management, they divided it into five major regions and sixteen vanguard teams, appointing core members to lead each. Each region held daily morning meetings via online chat apps, urging members to meet performance targets.
By the time of the incident, the app had over 10,000 registered accounts, reaching a maximum of 17 hierarchical levels, with total case involvement exceeding 57 million RMB. “The virtual coin had no intrinsic value, and the project lacked any real business operations—it relied entirely on continuously recruiting new members. Those above essentially profited from the money invested by those below. Once new investments dried up, the entire scheme collapsed,” explained the prosecutor. Ding Moumou, Fu Mou, and Chen directly or indirectly recruited at least 41 subordinates, meeting the legal definition of a pyramid scheme. On January 11, 2023, the three were arrested. All truthfully confessed upon capture and voluntarily returned all illicit gains amounting to over 22.59 million RMB. On December 22, 2023, the case was transferred to Zhongxiang City Procuratorate for prosecution. Prosecutors stated that the facts were clear, evidence solid and sufficient, and their actions violated Article 224-1 of the Criminal Law, constituting the crime of organizing and leading pyramid scheme activities. Following lawful prosecution, the local court issued the aforementioned ruling.
Odaily Planet Daily Commentary: Cryptocurrencies are often exploited as tools or facades for pyramid schemes, contributing significantly to public wariness toward digital assets. In the two cases above, one featured five pyramid tiers while the other reached an extreme 17-tier structure, far exceeding China’s legal limit of three distribution levels. With case values reaching tens of millions or even over 100 million RMB, these are considered landmark cases.
Charge Five: Concealing and Hiding Proceeds of Crime, Maximum Case Involving Over 15 Million RMB
In March 2021, Luyi County People's Procuratorate in Henan Province upheld a second-instance verdict in a Bitcoin-based "money muling" case. Seven suspects used mobile phones and cryptocurrency trading platforms or other "Bitcoin" apps to conduct "money muling" by buying and selling virtual currencies, involving over 9 million RMB. However, among the seven who earned commissions, the highest received only 8,500 RMB and the lowest just 500 RMB. The Luyi County People's Procuratorate charged all seven with concealing and hiding proceeds of crime, sentencing them to up to four years in prison and fines of up to 10,000 RMB.
In March 2022, a married couple used their virtual currency accounts to launder over 15 million RMB for upstream crimes, earning so-called "arbitrage fees." Prosecuted by Xihu District Procuratorate in Hangzhou, the case involving money laundering for a virtual currency "pig-butchering" scam was ruled in early March this year. Ultimately, spouses Zhang and Chen were convicted of concealing and hiding proceeds of crime and sentenced to 3 years and 10 months in prison with a 10,000 RMB fine, and 3 years in prison (suspended for 3 years) with an 8,000 RMB fine, respectively.
In August 2023, Mawei District Procuratorate in Fuzhou, Fujian Province, prosecuted defendant Chen Mou for concealing and hiding proceeds of crime. In February 2022, Chen received a call from Lin Mou directing him to download a chat app and send details of two bank cards under his name to a chat group. Soon, seven transfers totaling 99,609 RMB flowed into the cards. Following Lin’s instructions, Chen transferred the money into his Alipay and WeChat accounts, then into a third bank card. Finally, he purchased 94,988 RMB worth of virtual USDT coins, sent transaction screenshots to the chat group to complete the deal, and earned a 147.1 RMB commission. The court sentenced Chen to nine months in prison, suspended for one year, and fined him 5,000 RMB. Prosecutors noted that fraud gangs use virtual currencies to transfer and launder illicit funds. Such acts of money laundering under the guise of buying virtual currencies, knowing others are committing cybercrimes, already violate the law.
Odaily Planet Daily Commentary: In these cases, some participants earned less than 150 RMB yet still faced nine-month sentences and fines far exceeding their commissions. Clearly, engaging in "money muling" or assisting others in money laundering carries extremely high risks. Users should learn from these examples.
Charge Six: Illegally Acquiring Computer Information, Maximum Illegal Gain Over 2.5 Million RMB
In October 2023, a gang of five, including Lin Mou and Chen Mou, funded the creation of fake money muling websites embedded with purchased Trojan viruses. They used chat apps to lure victims into clicking links, remotely controlling computers to steal virtual currencies. The group stole 3,000 USDT valued at 18,000 RMB. In March 2022, the five were apprehended by police and later prosecuted.
Guangzhou Haizhu Court ultimately sentenced the five defendants to prison terms ranging from six months to two years, along with fines between 3,000 RMB and 12,000 RMB, for illegally acquiring computer information.
In June 2024, three employees from cybersecurity firm 360 were sentenced for stealing others’ virtual currencies. Shanghai Xuhui District People's Procuratorate accused Hong Mou, in collusion with Yang Mou and Zhang Mou (both handled separately), of exploiting a remote code execution vulnerability in Yapi between February 9 and 20, 2023, to gain access to a target virtual currency website. They infiltrated internal networks, planted Trojans, took control of servers, downloaded source codes, analyzed and obtained a victim Su’s virtual wallet address and private key, then constructed false instructions to transfer cryptocurrency from the wallet. They later converted the stolen assets into other cryptocurrencies and sold them, gaining over 2.5 million RMB in illegal profits.
Odaily Planet Daily Commentary: Notably, many local courts now recognize cryptocurrencies as personal assets. Therefore, profiting from cryptocurrency theft via malware is treated not only as illegally acquiring computer information but may also potentially qualify as theft or robbery under criminal law.
For example, in 2022, Shijingshan District People's Court in Beijing and Beijing First Intermediate People's Court handled a civil dispute over Litecoin investment. The final ruling stated that Litecoin is a specific type of virtual commodity without legal tender status and cannot circulate as currency. However, it possesses attributes of virtual property and goods and is protected by law. Similarly, Chaoyang District People's Court in Beijing previously adjudicated a Bitcoin robbery case, concluding that although virtual currencies are not legal tender, they possess property characteristics recognized under criminal law and can therefore be targets of property crimes. Ultimately, a group using violence and coercion to rob someone of Bitcoin was convicted of robbery.
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