A Beijing court sentenced five individuals to prison terms ranging from two to four years for converting client-transferred renminbi (RMB) into Tether (USDT) and transferring it abroad, in a surrogate foreign-exchange scheme involving more than US$166 million (≈ ¥1.182 billion). The case was publicised by the Beijing Municipal People’s Procuratorate and marks one of the largest disclosed stable-coin-linked FX prosecutions in China’s recent crackdown.
What the case involved
According to a case summary released by the Beijing procuratorate:
- Between January and August 2023, a network led by defendants including Lin Jia and associates used multiple bank cards and bank accounts to receive large sums of RMB transferred from clients of an illegal currency-exchange organisation. The funds were then converted into USDT via various crypto platforms and sent abroad via market transactions.
- The total business volume for the group is stated as ¥1.182 billion, which converts to more than US$166 million at prevailing exchange rates.
- The defendants were found to have disguised foreign-exchange activities using virtual-currency intermediaries rather than standard foreign-exchange licenced channels — thereby circumventing China’s foreign-exchange controls and engaging in “illegal business operations” under Chinese law.
- In the first-instance judgement issued by the Haidian District People’s Court of Beijing, five individuals were sentenced to terms ranging from two to four years, with accompanying fines. The court highlighted that the large size and cross-border nature of the transactions warranted more severe punishment.
Why this matters
- Stablecoins in cross-border capital flight: The case reinforces Chinese regulators’ view that stablecoin transactions—particularly when used to move value across borders—can constitute disguised5 foreign-exchange activity and are subject to harsh enforcement.
- Regulatory signal: China continues to intensify oversight of virtual-asset bridges and crypto-raw cross-border flows, especially where they interface with domestic currency controls and potential financial-stability risks.
- Global implications for crypto flows: While China bans domestic retail crypto trading, this case highlights how authorities view crypto platforms, stablecoins and cross-border transfers as a regime risk. Other jurisdictions may draw parallels in enforcement design.
- Risk for service-providers and individuals: Entities or individuals offering “buying USDT with RMB → transferring abroad → converting to fiat” services are at heightened7 risk of criminal prosecution in China, especially if volumes are large and cross-border layers are involved.
Legal context & framework
- Under Chinese law, virtual-asset transactions are not explicitly legalised; the authorities equate large-scale border-flow crypto transactions with “illegal business operations” or “disguised foreign exchange” when they resemble traditional FX but use crypto as the medium.
- Chinese authorities have previously emphasised that non-licenced entities engaging in foreign exchange or transferring value abroad by means of digital currency may face criminal liability. This case fits that pattern.
- The case was part of a broader 2023–25 campaign by Chinese regulators (including the People’s Bank of China and procuratorates) to curtail cross-border flows via crypto and enhance capital-flow controls.
What to watch next
- Further prosecutions and disclosures: Whether more cases involving stablecoins/USDT and cross-border RMB transfers will be publicly reported, and whether sentencing becomes more severe (five years or more) in larger cases.
- Guidance for domestic crypto-service providers: Whether China will release more detailed administrative or judicial interpretations that clarify how many crypto transfers and conversions trigger criminal exposure.
- Impact on overseas crypto platforms and peer-to-peer flows: Monitoring whether Chinese enforcement leads to fewer outbound transfers via stablecoins, changes in peer-to-peer markets or shifts in platforms servicing Chinese users.
- International coordination: Whether China will intensify cooperation with offshore jurisdictions or exchanges in asset-recovery or enforcement of cross-border crypto flows.
Bottom line
The Beijing court’s sentencing of five individuals for converting over US$166 million worth of RMB into USDT and transferring it abroad underscores China’s determination to crack down on crypto-facilitated cross-border flows. The case sends a strong signal to domestic actors that large or structured stable-coin transactions linked to foreign-exchange alternatives will face criminal repercussions. For global crypto participants, the decision highlights persistent risk in proxying cross-border currency flows via digital assets in jurisdictions with strict controls.
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