China Sentences Five in $29M Crypto Forex Scheme

A Shanghai court has handed down prison sentences ranging from two and a half to six years to five individuals convicted of operating an illegal foreign exchange network that used cryptocurrency to move more than $29.4 million out of China. The Shanghai Jing’an District People’s Procuratorate announced the sentencing on July 1, 2026, revealing that a total of nine people were arrested in connection with the scheme. Fines for the five defendants ranged from 300,000 yuan (approximately $44,150) to 1.5 million yuan (roughly $220,780).

Prosecutors said the group provided unauthorized foreign exchange services to wealthy domestic clients who needed to bypass China’s strict annual $50,000 per-person limit on converting or remitting foreign currency. Over a three‑year span, the network transferred more than 200 million yuan ($29.4 million) overseas. The investigation began in July 2024 after the State Administration of Foreign Exchange (SAFE) detected suspicious transactions linked to a company that later turned out to be the hub of the illegal operation.

The network used cryptocurrency transactions to hide the movement of funds, making it significantly harder for investigators to trace the money and collect evidence. According to the procuratorate, electronic evidence is critical in such cross‑border cryptocurrency cases and is easily lost if not secured quickly. One defendant, identified only by the surname Gao, worked as the domestic client manager and personally processed more than 170 million yuan (nearly $25 million) in illegal forex transactions. After leaving the company, Gao launched a separate currency conversion business offering similar services.

The case is part of an expanding crackdown on crypto‑linked money laundering and underground banking networks. SAFE reported that in the first half of 2025 alone it investigated more than 400 foreign exchange‑related violations and collaborated with law enforcement to penalize over 180 underground banking cases. Authorities have highlighted that virtual currencies, including stablecoins like USDT, are increasingly being used to convert yuan into foreign currencies without approval, despite mainland China’s ban on crypto trading and related financial services. The People’s Bank of China has consistently listed virtual currency laundering and cross‑border fund transfers among its top anti‑money laundering priorities.