Important points
- A Beijing court has sentenced five people involved in illegal foreign exchange transactions to prison terms for laundering $166 million worth of Chinese yuan using the USDT stablecoin.
- The group exchanged RMB 1.2 billion into USDT through a cryptocurrency trading platform and OTC, transferred the funds to an overseas digital wallet, and then exchanged them into foreign currencies, circumventing China’s strict exchange regulations.
- The court ruled that stablecoins pose a serious threat to China’s financial sovereignty, echoing comments by People’s Bank of China Governor Pan Gongsheng, who said digital assets are a tool for criminals to exploit vulnerabilities in the global financial system.
A court in Beijing has sentenced five people to prison for conducting $166 million worth of foreign exchange transactions in the USDT stablecoin. The case highlights China’s strict anti-crypto policies and continued crackdown on illicit currency transfers using digital assets.
This particular transfer is one of the largest crypto-related foreign exchange violations prosecuted this year. It also shows the country’s zero-tolerance approach to crypto assets, even though some of the country’s largest companies offer crypto-related services in Hong Kong, which offers a more permissive regulatory framework.
China jails five people for laundering $166 million in USDT overseas and circumventing strict renminbi conversion laws
According to court filings, the defendants purchased Tether USD (USDT), a stablecoin pegged 1:1 to the U.S. dollar, by: Remibi (RMB) Domestic route cryptocurrency exchange Over-the-Counter (OTC) Platform. The USDT was then transferred to overseas exchanges and wallets, and then converted into foreign currencies to facilitate international payments.
The group used this technique to circumvent China’s strict regulations on renminbi exchange and international remittances.
The court ruled that the “disguised” foreign exchange transactions violated the country’s anti-money laundering laws and foreign exchange control regulations, which prohibit fraudulent cross-border fund transfers. Chinese authorities say the operation bypassed banking rails normally supervised by the State Administration of Foreign Exchange and moved about 1.2 billion yuan (equivalent to $166 million) through hundreds of USDT transactions.
The group orchestrated a complex operation between January and August 2023, converting customer funds into USDT stablecoins to facilitate illegal cross-border transactions through multiple accounts. The Beijing Municipal People’s Procuratorate explained that the group used stablecoins as a bridge to disguise foreign exchange transactions, with the amount handled by individual members ranging from 149 million to 469 million yuan.
The operation was directed by Lin Jia, who was following instructions from an anonymous source. He then worked with other members, namely Lin Yi, Xia, Bao, and Chen, to collect funds for various customers through multiple bank accounts registered in his name. They convert incoming RMB payments to USDT through various cryptocurrency trading platforms, and then Cross-border cryptocurrency trading Earn profits from each transfer through the exchange.
Lin Jia, the main organizer of the foreign exchange transactions, was sentenced to four years and six months in prison and a fine of RMB 200,000 ($28,000), while his colleagues Lin Yi and Xia, who managed the bank transfers, were sentenced to three years and nine months in prison and each fined RMB 150,000 ($21,000). Bao and Chen, the junior members who ran the cryptocurrency wallet, were sentenced to two years and 11 months in prison and a fine of 100,000 renminbi ($14,000). All defendants were ordered by the court to forfeit the illegal profits they earned through commissions, amounting to approximately 500,000 RMB ($70,000).
The court said their punishment was necessary to deter illegal activities that undermine national financial stability, and said the incident was a serious threat to the country’s capital control system.
People’s Bank of China Governor Accuses Stablecoins of Facilitating Illegal Activities such as Terrorist Financing and Money Laundering
During a speech at the 2025 Financial Street Forum Annual Meeting on October 28, when the incident drew public attention, People’s Bank of China Governor Pan Gongsheng issued a stern warning against the use of stablecoins, stating that digital assets are a threat to global financial stability and monetary sovereignty.
He said that stablecoins, as “a form of financial activity,” still do not meet the basic requirements of financial supervision, citing failures in customer identification and AML compliance. The central bank chief stressed that stablecoins “amplify” weaknesses in the global financial system, exposing it to illicit activities such as money laundering and terrorist financing.
The People’s Bank of China reiterated that it will maintain a zero-tolerance policy for privately issued digital currencies while closely monitoring the global crypto regulatory framework. This comes as stablecoins continue to grow in demand for cross-border payments, with the market capitalization of fiat-backed cryptocurrencies recently reaching $310 billion. The space is dominated by Tether’s USDT and Circle’s USDC, which together account for 84% of the supply and process more than $46 trillion in payments annually.
Today, Visa announced that its payments network will soon offer support for four stablecoins tied to the US dollar and euro, issued on four major blockchains. The debit and credit card giant is working with bank customers to help issue and manage bespoke stablecoins. Since 2020, Visa has processed over $140 billion in stablecoin transactions, $100 billion of which are directly related to crypto purchases through exchanges.
