Original Author: Deng Xiaoyu, Li Haojun

Recently, the Deng Law team received a consultation from a student.

Little A (a pseudonym) saw someone on Xianyu offering "high price recycling U" at a rate two to three dimes higher than the exchange rate. He felt he discovered a business opportunity, so he bought USDT from the exchange and added the buyer's WeChat on Xianyu to conduct the transaction.

For the first order, he made 50 yuan, it went smoothly. For the second order, he made 200 yuan, also very smoothly. For the third order, he gathered 50,000 yuan in capital wanting to make a big score, but as soon as the money arrived, his bank card was frozen.

A check at the bank revealed, "Public Security Frozen," with a term of six months. What made him even more distressed was that a few days later, he received a call from the local police station asking him to explain the situation, claiming he was

Little A felt wronged: "I just made a profit from the exchange rate difference, how did I become a criminal?"

In light of the recent consultations regarding USDT card freezes from brick-moving activities, Lawyer Deng will take everyone to uncover this hidden "digital black market" and see how these seemingly enticing "brick-moving" businesses gradually push ordinary people into the abyss of criminal offenses.

Reason for Card Freeze: You Think It’s Arbitrage, But It's Actually Money Laundering

Searching for "USDT" on Xianyu usually shows blank, but if you switch to "out U", "game top-up", or "proxy payment", you'll find a bustling underground market filled with numerous posts about "high-price recycling" and "arbitrage from exchange rate differences."

Always remember a business common sense: USDT, as a stablecoin, has its price publicly and transparently available on all major exchanges. If someone is willing to buy your USDT at a price higher than the market price (for example, the exchange sells at 6.8, they offer 7.2) or asks you to help with a payment, there's only one reason: their money is dirty.

Criminals involved in telecom fraud and online gambling hold a lot of dirty money. They dare not buy coins directly from exchanges (because they would be risk-controlled), so they transfer dirty money to you through C2C platforms like Xianyu, trading for your clean USDT.

In the entire chain, you act as a "human money laundering machine". The few hundred yuan "difference" you earn is actually "money laundering fees" paid by the criminals.

In-depth Analysis: The Criminal Qualifiers Behind Three High-risk Transactions

Based on numerous cryptocurrency-related criminal cases processed by Lawyer Deng's team, these trading modes on Xianyu can easily violate the following offenses in the "Criminal Law". This is not alarmist but instances happening in judicial practice.

Scenario One: "Proxy Charging/Proxy Payment"—Concealment and Hiding of Criminal Proceeds

1. Operating Routine: The buyer claims they have no foreign currency card and asks you to help buy Steam gift cards or pay for foreign goods using USDT or foreign currency, promising to pay high commissions.

2. Legal Qualification: This is a typical case of "physical isolation" money laundering.

• Objective Behavior: You receive upstream funds (in reality, illicit funds), and "clean" these funds by purchasing goods or using recharge services.
• Subjective Judgment: Many people argue, "I didn't know it was dirty money." However, in judicial practice, as a mentally sound adult, when faced with commission proposals clearly above market rates and unreasonable transaction requests (such as bypassing formal payment channels), the law assumes you "ought to know" that the source of the funds is suspicious.
• Consequences: Constitutes concealment and hiding of criminal proceeds, with a maximum penalty of three years to seven years in prison.

Scenario Two: "High Price for U"—Assisting Information Network Criminal Activity

1. Operating Routine: Simple and crude, the other party buys your USDT at a price above the exchange rate.

2. Legal Qualification: This is a hotspot for assisting crime.

• Key Evidence: According to the "Interpretation on the Application of Law in Criminal Cases of Illegal Utilization of Information Networks and Assistance in Criminal Activities," "obviously abnormal transaction prices" are one of the key standards for recognizing the person's "subjective awareness."
• Logical Chain: You provided your bank card to receive fraudulent funds and completed the funds' payment settlement with USDT. This behavior directly assists upstream criminals in transferring illicit money, which legally constitutes "providing payment settlement assistance."
• Consequences: Meets the case-filing standards, punishable by up to three years in prison.

Scenario Three: "Flipping"—Illegal Business Operations

1. Operating Routine: If you are not just occasionally selling U but are making a business out of it, buying low and selling high to earn the difference.

2. Legal Qualification: Such behavior may be classified as illegal operation.

• Judicial Interpretation: In China, disguised selling of foreign exchange disrupts the financial market order, and if the circumstances are serious, it constitutes illegal business operations. Although there's ongoing debate about whether USDT is equivalent to foreign exchange, there have been judgments in some regions that classify "flipping USDT" as illegal business operations, and once convicted, the penalties are often heavier than for assisting crime.

Civil Risks: The "Bare Running" State Under National Notices

In addition to facing imprisonment, the crypto trading on Xianyu also finds itself in a scenario where civil rights are unprotected, with no one to turn to.

Since the notice on September 24, 2021, the national-level announcement has clearly defined: Activities related to virtual currency constitute illegal financial activities.

What does this mean?

• Contracts are invalid, losses are borne by individuals. If you are scammed selling U on Xianyu (for example, the other party sent fake payment screenshots or blacklisted you after receiving the coins), and you sue in court to require the other party to return your money, the court will likely determine the transaction contract between you as invalid based on the "breach of public order and good faith" or "violation of mandatory regulations in laws and administrative regulations" clauses in the Civil Code. Simply put, the law does not protect "black market" transactions. Your loss can only be swallowed by yourself.
• You cannot recover the money and may face fines. If your trading behavior is deemed illegal by administrative agencies (such as industry and commerce, public security), not only can you not recover the money you were scammed out of, but you also risk light administrative penalties or severe criminal charges.

Three Lifesaving Suggestions for "Side Hustlers"

For a small profit, carrying a criminal record that affects three generations, this calculation doesn't add up. Here are three suggestions for all "side hustlers":

1. Stay away from all "proxy payments" and "proxy purchases": No matter how good the other party's reasoning sounds ("insufficient study abroad quota", "no foreign card"), as long as it involves using your own account to help others with transactions, blacklist them. You are doing a side hustle, not philanthropy, nor are you a "money laundering tool."

2. Be wary of "premium" transactions: There is no free lunch in the world. Any coin-buying behavior higher than the market price must have something fishy. Do not let yourself fall into the crackdown range of the "card freezing operation" for wanting to save a few cents on the exchange rate.

3. What to do if the card is frozen?

• Do not trust online "unfreeze scalpers," that is secondary fraud.
• Do not panic; contact the bank immediately to inquire about the freezing agency (usually remote public security).
• Preserve evidence: Organize your chat records and transaction history on Xianyu. Although your actions may violate regulations, in criminal defense, proving that you "had no subjective intent" (just wanting to take advantage, not knowing it was dirty money) is key to avoiding prosecution or charges.

Conclusion

You might think that "brick moving arbitrage" on Xianyu is merely acting as the bottom-level "cannon fodder" in a vast black industrial chain. Many young people mistakenly believe that the anonymity of blockchain is a natural shield for crime, not realizing that the "immutability" of on-chain data becomes the most solid "ironclad evidence" for judicial authorities in determining convictions and penalties.

The upstream operators hide overseas, enjoying bloody profits; while downstream, you, because of your real-name-verified bank card and Alipay, become the easiest and lowest-cost targets for police crackdowns.

Do not wait until you find yourself behind bars to understand the weight of the word “compliance.”

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