Court Jails 15 for USDT Forex Laundering with ¥133bn Flow
China’s Putian Hanjiang District Court sentenced 15 individuals to prison terms ranging from eight months to three years and imposed fines for illegal forex trading and money laundering using USDT stablecoins. The defendants, led by Yan, Zheng and Lin, built an underground forex trading network via overseas messaging apps. They used the stablecoin USDT as a medium to convert between yuan and foreign currencies. Investigation shows bank account transactions exceeded RMB133 billion, with illegal forex trades totalling RMB25.62 million. The group withdrew over RMB478 million in cash from multiple banks in Fujian. They then used these funds to buy “U coins” and transfer them to upstream criminal wallets, effectively laundering cross-border criminal proceeds and profiting from exchange rate spreads. Prosecutors charged them with illegal business operations and aiding information network crimes. The verdict underscores China’s intensifying crackdown on crypto-based financial crime and highlights risks in using stablecoins like USDT for illicit forex exchange.
Bearish
The verdict sends a clear signal of intensifying regulatory scrutiny on crypto-driven foreign exchange and money laundering activities. With USDT at the center of the case, traders may anticipate stricter controls on stablecoin transactions in China, potentially reducing liquidity. Historically, similar enforcement actions in China, such as the 2019 ICO ban, have led to temporary market downturns for crypto assets tied to yuan flows. In the short term, volatility may increase as Chinese traders adjust positions. Long term, the crackdown could accelerate shifts to decentralized platforms or offshore markets, but persistent regulatory pressure may outweigh these changes, maintaining downward pressure on stablecoin-based trading flows.