On July 1, the Jing'an District People's Procuratorate of Shanghai disclosed that it has recently prosecuted a member of a criminal gang, Li, for illegal business operations involving cross-border virtual currency exchanges. The trial began on June 10, marking the conclusion of a series of illegal business cases spanning three years and involving over 200 million yuan. In July 2024, the State Administration of Foreign Exchange discovered abnormal clues regarding Company Z's use of virtual currency for cross-border asset transfers for domestic clients during routine monitoring, which were subsequently referred to the public security authorities. Investigations revealed that Company Z was established overseas in 2019, marketed itself under the guise of a 'private bank,' and developed a virtual banking app to create a facade of legitimacy, but it had not obtained the necessary foreign exchange business operating license in China and was essentially engaged in illegal foreign exchange activities. The gang targeted high-net-worth individuals with funding needs for overseas property purchases, immigration, and studying abroad, using intermediaries to attract clients, with customer managers, traders, and customer service personnel facilitating the exchange process. Clients purchased virtual currency from exchange merchants with renminbi and transferred it to Company Z's overseas virtual wallet, after which the gang exchanged the virtual currency for foreign currency abroad and transferred it to clients' designated overseas accounts. There was no actual cross-border flow of funds; instead, settlements were made through domestic and foreign capital pools, with Company Z charging a 3% exchange service fee and paying intermediaries a 0.5% commission. A total of nine individuals have been apprehended in this case, while one main suspect is still under investigation. After review, the relevant individuals were found to have collectively violated national laws by illegally buying and selling foreign exchange, disrupting financial order, and given the severity of the circumstances, they are to be held criminally liable for illegal business operations. The court sentenced five individuals, including Gao and Li, to prison terms ranging from six years to two years and six months, and imposed fines ranging from 1.5 million to 300,000 yuan; for Chen, Huang, and four others, due to the relatively lighter nature of their crimes, smaller amounts involved, and their voluntary confession, the procuratorial authority decided to handle their cases with relative non-prosecution.

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Shanghai Prosecutors Uncover Cross-Border Virtual Currency Exchange Case Involving Over 200 Million Yuan

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