What criminal risks might be involved if a bank card is frozen due to USDT OTC trading?
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What criminal risks might be involved if a bank card is frozen due to USDT OTC trading?
The earlier the relationships between the parties, funds, coins, and evidence are clarified, the more conducive it is to securing an accurate case characterization and liability determination.
Navigating Web3 tides with focused insightsBy: Mankun
Many cases involving USDT, OTC over-the-counter trading, and cross-border currency exchange do not start with the broad term of "virtual currency crime," but rather with a bank card that is suddenly frozen.
Many parties involved and their families feel confused: They only helped friends exchange a few transactions of USDT and earned a small difference; they neither opened an exchange nor cheated others out of money, so why are they being investigated by public security organs for crimes such as illegal business operations, covering up or concealing crime proceeds, or even money laundering?
The key to the problem often lies not in whether the party bought or sold USDT, but in what function the entire transaction ultimately accomplished.
The customer pays RMB within the country, the party transfers USDT to an overseas wallet according to the agreement, and then the overseas partner delivers USD, HKD, or other foreign currencies to the person designated by the customer; or vice versa, overseas personnel pay foreign currency first, and domestic personnel then transfer RMB to the designated account.
On the surface, what happens in between is buying USDT, transferring USDT, and selling USDT; but from the transaction result, what the customer ultimately completes is a value conversion between RMB and overseas foreign currency.
This is the issue that truly needs to be judged in cases involving USDT currency exchange.
An individual occasionally disposing of their own virtual assets is not the same thing as long-term completing collection and payment on behalf of others, cross-border redemption, and currency exchange settlement for others. Criminal risk usually does not start from "holding USDT," but from when the party starts solving problems for others such as "how to get domestic money overseas" or "how to turn foreign currency into RMB."
How is USDT Used as a Currency Exchange Tool?
Traditional underground banks engage in illegal exchange between RMB and foreign currencies. After entering the USDT scenario, the transaction form has changed, but the function of fund exchange may not have changed.
One common mode is domestic RMB exchange for overseas foreign currency.
The customer first pays RMB to a USDT merchant or intermediary within the country, the USDT merchant then transfers the corresponding amount of USDT to an overseas wallet, and overseas cooperative personnel pay USD, HKD, or other foreign currencies to the customer or the person designated by the customer.
In this process, RMB is not directly remitted overseas, nor is overseas USD directly remitted into the country, but through domestic RMB payment, on-chain USDT transfer, and overseas foreign currency delivery, the customer ultimately achieves the conversion of RMB to overseas foreign currency.
The reverse path is the same: after overseas personnel receive USD or other foreign currencies, they transfer USDT to a domestic intermediary, and the domestic intermediary then pays RMB to the designated account.
A direct cross-border remittance may not be visible in the banking system, but the value conversion between RMB and foreign currency has already been completed through domestic and overseas accounts and on-chain assets.
The "Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases of Illegally Engaging in Fund Payment and Settlement Business and Illegally Buying and Selling Foreign Exchange" implemented in 2019 clarifies that reselling foreign exchange, disguised buying and selling of foreign exchange, disrupting financial market order, where the circumstances are serious, shall be convicted and punished for the crime of illegal business operations. The Supreme People's Court further pointed out in relevant Q&A sessions with reporters that cross-border fund redemption conducted through a domestic and overseas "matching" method is a typical form of disguised buying and selling of foreign exchange.
Therefore, in cases involving USDT currency exchange, judicial organs will not only look at whether the transaction name is "buying coins" or "selling coins," but will penetrate the transaction form to judge whether the party used USDT to achieve cross-border exchange between RMB and foreign currency.
Whether USDT itself is foreign exchange is not the only key to such cases; more importantly, whether it is used to complete illegal currency exchange and cross-border redemption.
Buying and Selling USDT Does Not Naturally Constitute a Criminal Crime
On February 6, 2026, the People's Bank of China and eight other departments issued Document No. 42 [2026] of the People's Bank of China, further clarifying that virtual currencies such as Bitcoin, Ethereum, and Tether do not have legal status equivalent to legal tender, and continuing to include business activities such as carrying out exchange between legal tender and virtual currencies, exchange between virtual currencies, and providing information intermediaries and pricing for virtual currency transactions within the country within the scope of strict prohibition and ban according to law.
However, the prohibition of virtual currency-related business activities by regulatory rules does not mean that merely holding, transferring, or selling USDT by an individual naturally constitutes a criminal crime.
Criminal cases still require specific judgment:
Whether the party is occasionally disposing of their own virtual assets or long-term operating exchange business for unspecified customers; whether the customer is buying USDT itself or hopes to obtain the result of "RMB becoming overseas USD"; whether the party earns normal market price differences or collects handling fees and channel fees according to the redemption amount; whether the transaction reaches the amount and circumstance standards required for criminal prosecution.
According to the 2019 judicial interpretation, illegally engaging in fund payment and settlement business or illegally buying and selling foreign exchange, where the illegal business amount is over 5 million yuan, or the illegal income amount is over 100,000 yuan, shall be deemed as "serious circumstances." Where the illegal business amount is over 2.5 million yuan, or the illegal income amount is over 50,000 yuan, and at the same time having one of the following circumstances: having been criminally prosecuted for similar criminal behavior before, having received administrative punishment for similar illegal behavior within two years, refusing to explain the whereabouts of the involved funds or refusing to cooperate with recovery resulting in the inability to recover the illicit money, causing other serious consequences, etc., it can be deemed as "serious circumstances."
Therefore, whether a transaction is suspected of the crime of illegal business operations cannot be judged solely by "whether USDT was bought or sold," but also requires simultaneous judgment of transaction function, business attributes, involved amount, illegal income, and the specific role of the party in the entire chain.
Whether a USDT Transaction Crosses the Criminal Boundary Mainly Depends on Four Dimensions
Both are called "buying and selling USDT," but some people only have their bank cards frozen because they received funds involved in fraud and need to explain the source of funds to the bank or public security organs; while others will be subject to criminal investigation as members of illegal currency exchange channels, money laundering platforms, or underground banks.
The difference usually lies not in the word "USDT," but in what function the party actually undertook.
First, look at whether handling own assets or others' funds
Occasionally selling USDT held by oneself is significantly different in risk nature from long-term taking orders in communities, WeChat Moments, or platforms, collecting payments, releasing coins, transferring, and redeeming for different customers.
If the party continuously uses multiple bank cards, exchange accounts, and wallet addresses to collect funds from different personnel, and transfers coins to third parties or overseas wallets according to others' instructions, the color of "personal asset disposal" will gradually weaken, and the business attribute of providing exchange services and fund channels will correspondingly strengthen.
Second, look at whether the customer is buying USDT or the result of cross-border arrival
In ordinary virtual currency transactions, the customer's direct purpose is to obtain a certain amount of USDT and decide independently how to hold and dispose of it subsequently.
But in exchange-type transactions, what the customer truly cares about is often not the price and quantity of USDT, but "whether RMB can become USD overseas" or "when overseas funds can arrive domestically."
If the party is not only responsible for selling USDT but also responsible for arranging overseas personnel to deliver foreign currency, designating domestic collection accounts, coordinating payment times, splitting funds, or confirming final arrival, then they are not just completing an ordinary virtual currency trade, but are participating in a cross-border fund redemption path.
Third, look at whether earning normal price differences or channel fees
Ordinary buying and selling may generate price differences due to market price fluctuations.
But if the party collects fixed points according to the exchange amount, or collects handling fees, commissions, and rebates according to whether the funds successfully arrive, such income is closer to fund channel fees, not just normal price differences generated by virtual currency market transactions.
Income significantly higher than market levels will also cause case-handling organs to further review the authenticity of the transaction and the party's subjective understanding.
Fourth, look at whether the transaction forms multiple people, multiple cards, and domestic and overseas matching
Normal transactions can usually explain the relationship between the coin buyer, payer, coin receiver, and actual beneficiary.
In higher-risk transactions, there often appears a structure where domestic A pays RMB, overseas B receives USDT, or overseas C pays USD, domestic D receives RMB. The payer, payee, coin buyer, wallet holder, and actual beneficiary are inconsistent for a long time, and there may also be introducers, card owners, runners, and overseas cooperative parties in between.
The longer the transaction chain, the more dispersed the subjects, and the harder it is to correspond between coin flow and fund flow, the easier it is to be understood as domestic and overseas matching and fund redemption in the style of underground banks.
In addition, repeatedly changing collection accounts, requesting split payments, reminding customers "do not add remarks," using others' bank cards, requesting so-called "clean cards," or continuing to trade after being frozen multiple times or warned by platform risk controls, may also be used as an important basis for judging transaction abnormality and subjective knowledge.
Beyond Illegal Currency Exchange, Also Look at Whether Funds Involve Fraud or Gambling
The more complex part of USDT over-the-counter transactions is that transaction funds often intersect with upstream crimes such as telecom fraud, online gambling, and money laundering via run-score platforms.
After fraud or online gambling funds enter a bank account, they are often quickly stopped from payment and frozen. In order to transfer funds, upstream criminal personnel may quickly disperse, convert, and cross-border transfer funds through a large number of bank cards, cash, gold, or virtual currencies.
USDT has characteristics such as faster on-chain transfer speed, convenient cross-border circulation, and wallet addresses that can be frequently changed, so it may be used to transfer or convert crime proceeds.
At this time, what USDT merchants, OTC intermediaries, bank card providers, and fund transfer personnel face is not just the risk of the crime of illegal business operations.
1. Crime of Covering Up or Concealing Crime Proceeds
The core of the Crime of Covering Up or Concealing Crime Proceeds is that the actor knows that the relevant property belongs to crime proceeds and their proceeds, yet still helps to harbor, transfer, purchase, sell on behalf, or conceal or cover up in other ways.
The new judicial interpretation implemented in 2025 clarifies that converting property into cash, financial instruments, securities, transferring funds through transfer or other payment settlement methods, and cross-border transfer of assets, etc., may all belong to covering up or concealing behavior. At the same time, judicial organs should combine the information contacted by the actor, transaction methods, abnormal conditions of fund accounts, professional experience, relationship with upstream personnel, and their confessions and defenses, etc., to comprehensively judge whether there is "knowledge."
Therefore, one cannot directly presume the party constitutes a crime solely based on the account receiving fraud-involved funds; but if there are situations such as obviously abnormal prices, frequent payments by third parties, large amounts entering and exiting quickly in a short period, continuing to trade after multiple card freezes, preparing scripts to deal with investigations in advance, etc., criminal risk will significantly rise.
The Supreme People's Court and the Supreme People's Procuratorate also particularly emphasize that the "knowledge" for the Crime of Covering Up or Concealing Crime Proceeds should be strictly determined according to law, presumptions should be used cautiously, to prevent improperly expanding the scope of criminal crackdowns solely based on fund abnormalities or account freezes.
2. Crime of Helping Information Network Criminal Activities
The Crime of Helping Information Network Criminal Activities focuses on reviewing whether the actor knows that others are using information networks to commit crimes, yet still provides them with payment settlement, accounts, technology, or other help.
In cases involving currencies, the risk does not come from simply providing a wallet address, but from whether through bank cards, payment accounts, exchange accounts, or virtual currency exchange, actually providing usable collection and fund transfer channels for upstream information network crimes.
The relevant opinions issued by the Supreme People's Court, Supreme People's Procuratorate, and Ministry of Public Security in 2025 clarify that determining "knowledge" for the Crime of Helping Information Network Criminal Activities requires comprehensive judgment combining the time, method, frequency, tools of providing help, whether evading supervision, illegal profits, and the actor's professional identity, cognitive ability, and other factors; one cannot conduct objective imputation of crime solely because an account was provided or abnormal transaction flows occurred.
3. Crime of Money Laundering or Accomplice to Upstream Crimes
If the party knows that the funds originate from specific upstream crimes prescribed by the Criminal Law, yet still helps convert or transfer funds through virtual currencies, or assists in remitting funds overseas, it may also involve the Crime of Money Laundering.
If the party conspires with upstream criminal personnel such as fraud or online gambling in advance, or has already formed a stable cooperative relationship, collecting payments, transferring coins, allocating accounts, and handling funds for a long time according to upstream personnel instructions, then they may also be evaluated as a joint crime of the upstream crime.
Therefore, the judgment of charges in cases involving currencies cannot look only at a certain action, but must be comprehensively judged combining the time the behavior occurred, the party's understanding of the nature of the funds, the relationship with upstream personnel, and their role in the entire criminal chain.
Ordinary Investors Should Not Turn Personal Needs into Fund Channels
The place where ordinary investors are most likely to misjudge is mixing personal fund needs with providing exchange services for others.
Individuals having cross-border payment needs such as studying abroad, medical treatment, tourism, or real trade should handle foreign exchange purchase and remittance through formal channels such as banks, and preserve materials such as admission notices, payment notices, contracts, invoices, customs declaration forms, logistics vouchers, and overseas collection accounts.
But if a person starts long-term handling funds for different customers, exchanging others' RMB into USDT, and then arranging overseas personnel to deliver USD; or converting overseas customers' USDT into RMB and paying to designated domestic accounts; or under the name of "study abroad payment," "remittance from friends and relatives," "overseas investment," actually providing large-amount, frequent, fee-charging cross-border redemption services to strangers, it becomes very difficult to explain as personal fund arrangement.
For ordinary investors, several bottom lines are not complex:
Do not collect and pay on behalf of strangers or unfamiliar customers, do not give your own bank cards, payment accounts, exchange accounts, and wallets to others to transfer funds, do not publicly publish advertisements such as "collecting USDT releasing USDT," "large-amount currency exchange," "cross-border arrival" in communities or WeChat Moments, and do not participate in businesses where you cannot explain the source of funds and transaction purpose for a small amount of exchange difference and handling fees.
What truly needs to be guarded against is not the price rise or fall of a certain virtual currency, but whether oneself is becoming a fixed interface in someone else's fund chain.
After Card Freeze, Summons, or Investigation, First Clarify Four Tables
After currency-involved transactions enter criminal procedures, the questions families most often ask are usually: Is buying and selling USDT definitely a crime? Can one directly say the party did not know there were problems with the funds?
The truly useful practice is not to argue an abstract conclusion first, but to completely restore the transaction facts.
The first is the role table.
It needs to be clarified whether the party is an ordinary coin buyer, seller, USDT merchant, intermediary, bank card provider, fund transfer person, overseas contact person, or organizer; whether they occasionally participated in a transaction or long-term took orders; whether they were responsible for pricing, finding customers, arranging accounts, allocating funds, or contacting overseas personnel.
The second is the fund and coin flow table.
Which account the RMB was transferred from and entered which account; which wallet the USDT was transferred from and finally entered which address; whether the payer, coin buyer, coin receiver, and actual beneficiary are consistent; whether there exists third-party payment, split payment, cash handover, domestic and overseas matching, and collection and payment on behalf.
The third is the income table.
Whether the party obtained normal market price differences, or handling fees, commissions, rebates, or channel fees; whether the income is significantly higher than normal market levels; whether fixed points were collected according to the redemption amount.
The fourth is the communication and risk warning table.
It is necessary to organize chat records, group announcements, order remarks, platform risk control warnings, bank card freeze notifications, counterparty identity information, and whether the party was ever reminded that funds might involve fraud or gambling. Subjective knowledge cannot rely solely on a sentence of "he said he didn't know," but similarly cannot be directly determined without other evidence just because abnormal transactions occurred.
If the transaction indeed has real purpose, materials such as study abroad, medical treatment, trade, wage income, contract invoices, customs logistics, and overseas account transaction flows should also be organized synchronously to explain the transaction purpose and source of funds.
If bank card freeze, exchange account freeze, public security summons, or case filing investigation has already occurred, bank transaction flows, exchange orders, wallet addresses, on-chain transaction hashes, chat records, counterparty identity, as well as price and profit methods should be saved as soon as possible.
Do not summarize all facts with just one sentence "I was just normally buying and selling coins," nor is it appropriate to unauthorizedly delete chat records, contact relevant transaction personnel, sign situation explanations, or make compensation commitments before understanding the nature of the case, involved amount, and source of funds, to avoid causing evidence loss or contradictory factual statements.
Conclusion
USDT is just a tool.
What truly brings criminal risk is that it is used to bypass foreign exchange management, complete cross-border redemption, transfer crime proceeds, or hide source of funds.
USDT-involved criminal cases ultimately still return to people, money, coins, and evidence: Whether the party is handling their own assets or others' funds; whether completing an occasional transaction or long-term providing exchange channels; whether earning normal market price differences or currency exchange handling fees; whether able to explain counterparties, source of funds, wallet addresses, and final destination; whether still continuing to trade after obvious abnormalities and risk warnings appear.
If already investigated due to issues such as USDT transactions, OTC over-the-counter transactions, cross-border currency exchange, bank card freezes, illegal business operations, covering up or concealing crime proceeds, helping information network crimes, or money laundering, the first step is not to search for a simple "guilty" or "innocent" answer online, but to clarify transaction roles, RMB fund flows, on-chain coin flows, account relationships, chat records, transaction hashes, and profit methods as soon as possible.
The Mankun Criminal Defense Team has long handled cases involving virtual currencies, OTC over-the-counter transactions, cross-border redemption, card freezes, illegal business operations, covering up or concealing crime proceeds, helping information network crimes, and money laundering, etc., and can assist parties and families in judging: whether the relevant behavior belongs to personal asset disposal, professional USDT merchant operations, or has already been understood by case-handling organs as illegal currency exchange or involved illicit fund channels; and combine fund transaction flows, on-chain records, and account relationships to further sort out involved amounts, subjective knowledge, and scope of personal responsibility.
The boundaries of currency-involved criminal cases are ultimately hidden in specific facts. The sooner the relationship between people, money, coins, and evidence is clarified, the more conducive it is to striving for accurate case characterization and responsibility determination.
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