Major illegal forex case involving Crypto Assets in China exposed: $166 million involved, 5 people sentenced.

The Beijing court sentenced five suspects to two to four years in prison for illegally transferring 1.182 billion RMB (approximately 166 million USD) through the USDT stablecoin in a major cryptocurrency forex case. This case was revealed at the 2025 Financial Street Forum Annual Meeting, showcasing the increasingly mature ability of Chinese regulatory authorities to track and prosecute cryptocurrency transactions. Meanwhile, Pan Gongsheng, the governor of the People's Bank of China, issued a stern warning at the same forum, stating that stablecoins pose a threat to global financial stability and reaffirmed the zero-tolerance policy towards private digital currencies.

01 Case Detail Analysis: Crypto Assets as a “Bridge” for Forex Violations

Criminal Techniques and Operational Scale

From January to August 2023, the criminal gang orchestrated a complex operation to convert customer funds into USDT stablecoins to facilitate illegal cross-border transfers. A total of 1.182 billion yuan was processed through multiple accounts, with individual members handling amounts ranging from 149 million to 469 million yuan.

The case was led by Lin Jia under the instructions of an unnamed party, collaborating with Lin Yi, Xia Mou, Bao Mou, and Chen Mou to transfer client funds through multiple bank accounts registered under their names. The gang converted the received RMB payments into USDT through various Tether trading platform accounts they controlled, and then completed cross-border transfers through platform trading, while making a profit from each exchange.

Judicial Determination and Judgment Results

The Beijing People's Procuratorate detailed how the plan used virtual currency as a “bridge” to disguise forex transactions. The Haidian District People's Court made a first-instance ruling on March 21, 2025, and all five defendants accepted the judgment without appealing.

This “full coverage” approach addresses the “evidence collection dilemma” in cross-border economic crimes involving capital and personnel across multiple jurisdictions, as stated by prosecutors. The case provides authorities with a “key judicial practice reference” when dealing with similar crypto-related financial crimes in an increasingly digital world.

02 Technological Breakthrough in Investigation: Innovative Practices in Blockchain Forensics

multidimensional data correlation analysis

The prosecutor's office has employed specialized technical methods to overcome the inherent challenges of cryptocurrency investigations, combining financial data analysis with blockchain transaction tracking. Investigators compared the time correlation between traditional bank accounts and virtual currency trading accounts, identifying suspicious patterns in the flow of funds that contradicted the defendant's claims of legitimate “crypto speculation.”

This approach represents a significant advancement by regulatory authorities in the field of crypto asset forensics, effectively breaking down the concealment methods of criminals by establishing a correlation map between traditional financial data and blockchain transactions.

Cross-border Data Forensics Compliance

The procuratorate remotely examined data from overseas platforms to verify the evidence collection process, ensuring legal compliance while building the case. This approach is particularly noteworthy as it demonstrates the innovative thinking of Chinese judicial authorities in cross-border data collection, adhering to legal procedural requirements while effectively addressing the transnational nature of Crypto Assets crimes.

The application of technical means not only improves the efficiency of evidence collection but also establishes a replicable operational process for handling similar cases, which has important reference value for the investigation and prosecution of future Crypto Assets-related financial crimes.

03 Regulatory Policy Trends: The Threat of Stablecoins and the Zero Tolerance Stance

The central bank governor's stern warning

The Governor of the People's Bank of China, Pan Gongsheng, issued a stern warning at the same Financial Street Forum, stating that stablecoins pose a threat to global financial stability and monetary sovereignty. “Stablecoins, as a form of financial activity, still fail to meet the basic requirements of financial regulation,” Pan Gongsheng stated, pointing out the failures in customer identification and anti-money laundering compliance.

The central bank governor emphasized that stablecoins “amplify the weaknesses of the global financial system” and expose loopholes in terrorist financing and money laundering. Pan Gongsheng confirmed that the People's Bank will maintain a zero-tolerance policy towards private digital currencies while closely monitoring the development of the overseas stablecoin market.

Policy Background and Market Impact

At the time these warnings were issued, the stablecoin market had reached a scale of approximately $310 billion, with USDT and USDC accounting for about 84% of the supply (59% and 25% respectively), processing over $46 trillion in settlements annually. China's regulatory authorities' tough stance on stablecoins reflects their high concern for financial sovereignty and systemic risks.

04 Technology Giants Encounter Setbacks: Policy Intervention in Hong Kong's Stablecoin Plan

Direct instructions to halt private issuance.

After receiving direct instructions from the People's Bank of China and the Cyberspace Administration of China in mid-October, Ant Group and JD.com halted their stablecoin issuance plans in Hong Kong. Officials informed the two companies that the right to issue currency must belong exclusively to the state, rather than private enterprises.

This intervention reversed the previous momentum, as Ant Group announced in June plans to seek stablecoin licenses in Hong Kong, Singapore, and Luxembourg. Despite setbacks, Ant Group has applied for trademarks in Hong Kong for virtual assets and blockchain technology, including “ANTCOIN,” while its Whale Blockchain platform processed one-third of global payment transactions last year, valued at over $1 trillion.

Continuous expansion of regulatory scope

In August, Chinese regulators ordered brokerages and research institutions to stop releasing reports or holding seminars promoting stablecoins due to concerns about fraud and speculation risks. This series of actions indicates that regulatory oversight is expanding from direct financial activities to the realm of information dissemination and market education, creating a comprehensive regulatory coverage.

05 Regulatory Balance in the Hong Kong SAR: Prudent Advancement of Limited Licenses

The surge and restrictions of license applications

Last month, Hong Kong's stablecoin licensing system attracted 77 letters of intent from banks, tech companies, and Web3 startups. The Hong Kong Monetary Authority held preliminary meetings while warning that only a limited number of licenses would initially be approved.

This situation indicates that although Hong Kong maintains a relatively open attitude towards exploring Digital Money innovation, it is still subject to strict constraints from the central government. The regulatory path for stablecoins in Hong Kong reflects a cautious balance between maintaining financial stability and encouraging innovation.

Regional Differences and Unified Regulation

The differences in regulatory attitudes between Hong Kong and the mainland reflect the policy flexibility under the “one country, two systems” framework, but the cases of Ant and JD show that when it comes to core financial sovereignty issues such as currency issuance, a unified national policy baseline is still followed. This layered regulatory system provides an important reference for future digital asset regulation.

06 Significance of Judicial Practice: New Standards for Evidence Collection in Crypto Assets Crimes

Legal recognition of technical means

The significance of this case lies in the formal recognition and standardized application of evidence collection technology for Crypto Assets by the judicial authorities. By combining blockchain analysis techniques with traditional financial investigation methods, a chain of evidence that can be accepted by the court has been established, setting a precedent for the handling of similar cases in the future.

The “full chain” evidence collection method adopted by the prosecutorial authorities forms a complete evidence closed loop from the funding entry to the blockchain transfer and then to the funding exit, effectively solving the judicial dilemma of cross-border evidence collection.

Preliminary Establishment of Sentencing Standards

The sentences of two to four years for five criminal suspects also provide a sentencing reference for similar cases. This ruling reflects a severe crackdown on financial crimes related to Crypto Assets while adhering to the principle of proportionality in law, avoiding controversies that may arise from excessive sentencing.

Future Outlook: The Parallel Evolution of Regulatory Technology and Compliance Development

Continuous strengthening of regulatory capabilities

This case demonstrates that Chinese regulators' technical capabilities in the regulation of Crypto Assets are rapidly improving. The expansion from traditional fund flow analysis to blockchain transaction tracking is continuously narrowing the space for regulatory arbitrage.

In the future, as regulatory agencies gain further mastery over blockchain analysis technology, the concealment of cryptocurrency crimes will be significantly reduced, which will help build a more transparent digital asset ecosystem.

The compliance path becomes clearer step by step.

Despite the strict current regulatory policies, the standardization of case handling processes and the standardization of technical means have laid a foundation for the development of compliant business in the future. With the clear delineation of regulations, compliant cryptocurrency businesses are expected to gain development space under the strict adherence to regulatory requirements.

In the long term, advancements in regulatory technology and the improvement of compliance frameworks will jointly promote the healthy development of the digital asset industry, while preventing financial risks and preserving appropriate space for technological innovation.

Conclusion

The recent ruling by the Beijing court in this USDT illegal forex case marks a new phase in China's regulatory enforcement of cryptocurrency. Through advanced technological means and standardized judicial procedures, regulatory authorities have demonstrated their determination and capability to combat financial crimes related to crypto assets.

For industry participants, this case conveys a clear signal: the era of regulatory arbitrage using Crypto Assets is coming to an end, and compliance has become a prerequisite for survival and development. With the continuous improvement of regulatory technology and the ongoing accumulation of law enforcement experience, the phase of rampant growth in the Crypto Assets industry is about to conclude, and a new era of standardized development is approaching.

Globally, China's active exploration and practice of cryptocurrency regulation also provides an important reference for other countries and regions. Against the backdrop of the rapid development of Digital Money, how to balance innovation incentives with risk prevention, and how to establish effective cross-border regulatory cooperation will become challenges and opportunities that global regulatory agencies face together.