TechFlow news — On December 10, according to the Procuratorial Daily, on November 18, the Jianhu County People's Procuratorate in Jiangsu Province organized prosecutors to go into communities and streets to distribute brochures, explain major forms of virtual currency-related crimes, and interpret legal risks associated with virtual currency transactions, based on a recent case involving a new type of crime using virtual currency trading as a medium. In this case, three young men born after 1995 engaged in illegal foreign exchange trading using virtual currency as a vehicle, completing over 650 transactions within just a few months and exchanging nearly 30 million yuan worth of foreign currency. The Jianhu County People's Procuratorate filed public prosecution, and Lin and two others were recently sentenced by the court to fixed-term imprisonment ranging from five years to one year and six months, each also receiving a fine for the crime of illegal business operations.
In early 2020, 25-year-old Lin, who had not found suitable employment due to his low level of education, saw the booming virtual currency market and learned online that many people had become rich overnight through cryptocurrency trading. He hoped to turn his life around by entering this field. Introduced by a friend, he started doing virtual currency "arbitrage" with his high school classmate Yan at a local studio. Later, Lin colluded with a Nigerian national to purchase Tether (USDT) on Binance using Nigeria’s local currency, the Naira. The purchased USDT was then transferred to Lin’s Binance account. Lin sold the USDT to domestic cryptocurrency traders in exchange for RMB, which he then transferred to bank accounts within China provided by someone known as "Prince." Lin predetermined the purchase price at 5% below the daily listed rate of USDT, then resold it at the full listed rate, profiting from the spread.
Investigations revealed that between September 2020 and January 2021, Lin and Yan engaged in unauthorized foreign exchange trading amounting to over 21.29 million yuan. From January to April 2021, after Xie joined them, the trio conducted another 8.38 million yuan in unauthorized foreign exchange transactions. Prosecutors noted, “This form of disguised foreign exchange trading may appear to involve no physical movement between RMB and foreign currencies, but in reality, it circumvents China’s foreign exchange supervision, undermining financial market stability. It also distorts national economic data, affecting monetary policy decisions such as exchange rate adjustments and foreign reserve management, posing significant risks.”
Prosecutors concluded that Lin and the other two used virtual currency as a medium to provide cross-border payment and currency exchange services for profit from exchange rate differences—exploiting the unique attributes of virtual currency to bypass state foreign exchange controls. This activity undermined the effectiveness of foreign exchange regulation and the stability of official exchange rates, disrupting normal financial market order. They should therefore be held criminally liable for illegal business operations under the law.
