The boundaries of criminal cases involving cryptocurrencies ultimately lie in the specific facts. The sooner the relationships between people, money, cryptocurrency, and evidence are clarified, the more favorable it is for achieving an accurate classification of the case and liability determination.

Written by: Mankun

Many cases involving USDT, OTC over-the-counter trading, and cross-border currency exchange do not start with the broad term "virtual currency crime," but rather with a bank card that was suddenly frozen.

Many parties involved and their families feel puzzled: they just helped a friend exchange a few USDT and made a small profit; they did not open an exchange or defraud anyone's money. Why are they being investigated by public security for illegal business operations, concealing criminal proceeds, or even money laundering?

The key issue is often not whether the parties involved bought or sold USDT but rather what function the entire transaction ultimately completed.

Customers pay RMB domestically, and the parties involved transfer USDT into an overseas wallet as agreed, and then the overseas partner pays US dollars, Hong Kong dollars, or other foreign currencies to the person designated by the customer; or vice versa, where overseas personnel first pay in foreign currency, and domestic personnel then transfer RMB into a designated account.

On the surface, what occurs in between is buying USDT, transferring USDT, and selling USDT; but from the transaction results, what the customer ultimately accomplishes is the value conversion between RMB and foreign currency overseas.

This is the real issue that needs to be judged in cases involving USDT currency exchange.

Occasionally disposing of one's own virtual assets is not the same as consistently handling payments, cross-border payments, and currency settlements for others. Criminal risks often do not begin with "holding USDT," but with the parties involved solving the problem of "how the money in the domestic market reaches overseas" and "how foreign currency turns into RMB."

How is USDT used as a currency exchange tool?

Traditional underground banks engage in illegal exchanges between RMB and foreign currencies. After entering the USDT scenario, the form of transactions has changed, but the function of currency exchange may not have been altered.

A common model is exchanging domestic RMB for overseas foreign currency.

Customers first pay RMB to a USDT trader or intermediary domestically, who then transfers the corresponding amount of USDT to an overseas wallet, and the overseas personnel pay the customer or the designated person in foreign currencies such as dollars or Hong Kong dollars.

During this process, RMB does not directly leave the country, nor do dollars directly flow into the country. However, through domestic RMB payments, on-chain USDT transfers, and the delivery of foreign currencies overseas, the customer ultimately achieves the conversion of RMB into overseas foreign currencies.

The reverse path is the same: after overseas personnel receive US dollars or other foreign currencies, they transfer USDT to the domestic intermediary, who then pays RMB to the designated account.

The banking system might not see a directly occurring cross-border remittance, but the value conversion between RMB and foreign currency has already been achieved through domestic and overseas accounts and on-chain assets.

The "Two Supreme" judicial interpretation implemented in 2019 clarified that arbitraging foreign exchange, disguised purchasing and selling of foreign exchange, and disturbing financial market order may result in criminal conviction for illegal business operations if the situation is serious. The Supreme People's Court further pointed out in a relevant press conference that conducting cross-border exchange using domestic and foreign "paired trades" is a typical form of disguised foreign exchange buying and selling.

Therefore, in USDT currency exchange cases, judicial authorities will not only look at whether the transaction is called "buying currency" or "selling currency," but will penetrate through to the transaction form to determine whether the parties used USDT to achieve cross-border conversion between RMB and foreign currencies.

Whether USDT itself qualifies as foreign exchange is not the sole key to such cases; what is more important is whether it has been used to achieve illegal currency exchange and cross-border payments.

Buying and selling USDT does not necessarily constitute a criminal crime

On February 6, 2026, the People's Bank of China and eight other departments issued Document No. [2026] 42, further clarifying that cryptocurrencies like Bitcoin, Ethereum, and Tether do not have the same legal status as legal tender, and that conducting activities such as exchanging legal currency for virtual currency, exchanging between virtual currencies, and providing information brokerage and pricing for virtual currency transactions will continue to be strictly prohibited and legally banned.

However, the prohibition of activities related to virtual currencies by regulatory rules does not mean that simply holding, transferring, or selling USDT automatically constitutes a criminal offense.

Criminal cases still require specific judgments:

Did the parties involved occasionally dispose of their own virtual assets, or have they been consistently operating exchange services for unspecified clients? Did the customer purchase USDT itself, or did they expect to achieve "RMB turning into overseas dollars"? Did the parties earn normal market price differences or collect fees and commissions based on the payment amounts? Did the transaction meet the amount and circumstances required for criminal prosecution?

According to the 2019 judicial interpretation, those engaged in illegal payment settlement businesses or illegal foreign exchange transactions, with amounts over 5 million yuan or illegal profits over 100,000 yuan, should be recognized as "serious circumstances." If the illegal operational amount exceeds 2.5 million yuan, or illegal profits exceed 50,000 yuan, and at the same time if any of the following conditions apply: previously facing criminal prosecution for similar crimes, receiving administrative punishment for similar violations within two years, refusing to disclose the direction of illegal funds, or refusing to cooperate in the recovery efforts that result in losses being irretrievable, leading to other serious consequences, it may also be recognized as "serious circumstances."

Therefore, whether a transaction involves potential illegal operation does not solely depend on "whether USDT has been bought or sold," but also needs to assess the transaction's functions, operational attributes, involved amount, illegal profits, and the specific role of the parties throughout the entire chain.

Whether a USDT transaction crosses the criminal boundary depends mainly on four dimensions

Although it is called "buying and selling USDT," some people only face a frozen bank card due to receiving funds related to fraud and need to explain the source of funds to the bank or public security; others may be investigated as part of illegal currency exchange channels, score-running platforms, or underground banking members.

The distinction usually does not lie in the term "USDT," but rather in what function the parties involved have undertaken.

First, whether handling one’s own assets or others’ funds

Occasionally selling one’s own USDT differs significantly in risk nature from engaging in transactions over the long term that involve accepting payments, distributing currencies, transferring, and settling for different clients.

If the party involved continuously uses multiple bank cards, exchange accounts, and wallet addresses to receive different individuals' funds, and based on others’ instructions, transfers currencies into third parties or overseas wallets, the characteristic of "asset disposal" will gradually weaken, while the operational nature of providing exchange services and funds channels will accordingly enhance.

Second, whether the customer is purchasing USDT itself or the result of cross-border arrival

In ordinary virtual currency transactions, the customer’s direct goal is to obtain a certain amount of USDT and independently decide how to hold and dispose of it afterward.

However, in exchange-type transactions, what the customer truly cares about is often not the price and quantity of USDT, but rather "whether RMB can turn into dollars overseas" and "when overseas funds can arrive domestically."

If the parties are not only responsible for selling USDT but also for arranging overseas personnel to deliver foreign currencies, designating domestic receiving accounts, coordinating payment times, splitting funds, or confirming final receipts, they are no longer completing an ordinary virtual currency transaction but participating in a cross-border fund payment path.

Third, whether earning normal price differences or channel fees

Ordinary buying and selling may create price differences due to market fluctuations.

However, if the parties involved charge a fixed point based on the amount exchanged or charge fees, commissions, or rebates based on whether the funds successfully arrive, these earnings are closer to funds channel fees rather than merely normal price differences generated in the virtual currency market.

Earnings significantly above market levels will also prompt authorities to further examine the authenticity of transactions and the subjective understanding of the parties involved.

Fourth, whether the transaction involves multiple people, cards, and domestic and foreign paired trades

Ordinary transactions can usually clarify the relationships between the buyer, payer, receiver, and actual beneficiary.

In higher-risk transactions, it is common for domestic party A to pay RMB, while overseas party B receives USDT, or overseas party C pays dollars, while domestic party D receives RMB. When the payer, payee, buyer, wallet holder, and actual beneficiary remain inconsistent over the long term, there may also be intermediaries, cardholders, couriers, and overseas partners involved.

The longer the transaction chain, the more dispersed the parties, and the more difficult it is to correspond to the currencies and funds flows, the more likely it is to be interpreted as underground banking-style domestic and foreign paired trades and fund exchanges.

In addition to this, repeatedly changing receiving accounts, requesting payment splits, reminding customers to "not leave notes," using others' bank cards, asking for so-called "clean cards," or continuing to trade even after multiple card freezes or warnings from the platform, may also serve as important bases for judging transaction anomalies and subjective knowledge.

Beyond illegal currency exchange, consider whether funds are related to fraud or gambling

The complexity of USDT-related over-the-counter transactions lies in the frequent intersection of transaction funds with telecom fraud, online gambling, and score-running money laundering.

After fraud or online gambling funds enter a bank account, they are often quickly halted or frozen. In order to transfer funds, upstream criminals may rapidly disperse, convert, and transfer money across borders through numerous bank cards, cash, gold, or virtual currencies.

USDT features fast on-chain transfer speeds, convenience in cross-border circulation, and the ability to frequently change wallet addresses, making it potentially useful for transferring or converting criminal proceeds.

At this point, USDT traders, OTC intermediaries, bank card providers, and fund transfer personnel face more than just the risk of illegal business operations.

1. Concealment and disguise of criminal proceeds

The core of concealment and disguise of criminal proceeds is that the actor knows that relevant property belongs to criminal proceeds and its returns, yet assists in hiding, transferring, purchasing, selling on behalf of others, or in other ways concealing or disguising.

The new judicial interpretation effective in 2025 clearly states that converting property into cash, financial instruments, or securities, transferring funds via bank transfers or other payment settlement methods, and cross-border asset transfers may all count as concealment and disguise acts. At the same time, judicial authorities should integrate the information the actor was exposed to, transaction methods, abnormal fund account situations, professional experience, relationships with upstream personnel, and their statements and defenses to comprehensively judge whether there is "knowledge."

Thus, simply because an account received suspected fraudulent funds does not directly suggest that the parties have committed a crime; however, if there are noticeably abnormal pricing, frequent third-party payments, large short-term entries and exits, continued trading after multiple card freezes, or proactive preparation of responses to investigations, the criminal risks will significantly increase.

The Supreme People’s Court and the Supreme People’s Procuratorate have also emphasized that the "knowledge" associated with the concealment and disguise of criminal proceeds should be strictly identified according to law, with caution in presumptions, to prevent unjustly broadening the scope of criminal prosecution based solely on abnormal fund activities or account freezes.

2. Assisting information network criminal activities

The focus of the crime of assisting is to examine whether the actor knew that others were committing crimes using information networks and still provided payment settlement, accounts, technology, or other assistance.

In cryptocurrency-related cases, the risk does not stem merely from providing a wallet address but from whether the actor has actually facilitated a usable receipt and funds transfer channel for upstream information network crimes through bank cards, payment accounts, exchange accounts, or cryptocurrency exchanges.

Guidance released in 2025 by the "Two Supreme, One Department" explicitly states that determining "knowledge" in assisting crimes requires comprehensive consideration of the time, method, frequency, tools of the assistance provided, whether they evade supervision, illegal profits, and factors such as the actor's profession and cognitive ability; it cannot simply be presumed guilty due to the provision of an account or occurrence of abnormal transactions.

3. Money laundering or complicity in upstream crimes

If the parties are aware that the funds originate from specific upstream crimes defined by criminal law and still assist in converting or transferring the funds through virtual currencies, or aid in the remittance of funds overseas, they may also be implicated in money laundering.

If the parties collude in advance with fraudsters or online gambling operators, or have already formed stable cooperative relationships, receiving payments, transferring currencies, distributing accounts, and handling funds according to upstream instructions, they may also be evaluated as participating in upstream criminal complicity.

Therefore, in determining the charges in cryptocurrency cases, one cannot merely observe a single action but must consider the timing of the behavior, the parties' understanding of the nature of the funds, their relationships with upstream personnel, and their roles within the entire criminal chain comprehensively.

Ordinary investors should not turn personal needs into financial channels

The most frequent misjudgment ordinary investors make is to mix their personal funding needs with providing exchange services for others.

If an individual has genuine cross-border payment needs such as studying abroad, medical treatment, tourism, or legitimate trade, they should process the purchase and remittance through formal channels such as banks and keep records like admission notices, payment notifications, contracts, invoices, customs declarations, logistics vouchers, and overseas receiving accounts.

However, if a person begins to consistently handle funds for different clients, converting others' RMB into USDT and then arranging for overseas personnel to deliver US dollars; or converting USDT from overseas clients into RMB and paying it to designated domestic accounts; or perhaps offering large, frequent, and charged cross-border payment services under the guise of "study abroad fees," "remittances from friends and family," or "overseas investments," it becomes increasingly difficult to explain these actions as mere personal financial arrangements.

For ordinary investors, a few baseline rules are not complicated:

Do not act as an intermediary for unfamiliar clients or strangers for payments; do not allow others to transfer funds with your bank card, payment account, exchange account, and wallet; do not publicly post advertisements for "receiving and sending USDT," "large currency exchanges," "cross-border receipts," etc., in social communities or friend circles; and do not engage in operations involving funds or transaction purposes that cannot be explained for a small profit and fee.

What truly warrants caution is not each fluctuation in virtual currency prices but whether one is turning into a fixed interface within another's financial chain.

After card freezes, summons, or investigations, clarify these four aspects first

Once cryptocurrency transactions enter criminal proceedings, the most common question from family members is: Does buying and selling USDT always constitute a crime? Can we directly claim that the parties were unaware of issues with the funds?

The truly useful approach is not to argue an abstract conclusion but to fully restore the trading facts.

The first aspect is a role chart.

It needs to be clear whether the parties are ordinary buyers or sellers of digital currencies, USDT traders, intermediaries, card providers, fund transfer personnel, overseas contacts, or organizers; whether they participated sporadically in a transaction or have been consistently accepting orders; if they are responsible for pricing, finding clients, arranging accounts, allocating funds, or contacting overseas personnel.

The second aspect is a flowchart of funds and digital currencies.

From which account did the RMB transfer out, and to which account did it enter; from which wallet did the USDT transfer out, and to which address did it ultimately enter; are the payer, buyer, receiver, and actual beneficiary aligned; were there any third-party payments, split payments, cash handovers, domestic and foreign matched trades, and agency payments.

The third aspect is a profits chart.

Did the parties obtain normal market price differences, or were they receiving fees, commissions, rebates, or channel fees; was the profit significantly above normal market levels; did they charge fixed points based on the payment amount.

The fourth aspect is a communication and risk alert chart.

It is necessary to organize chat records, group announcements, order comments, platform risk alerts, bank freeze notices, transaction counterparty identity information, and whether the parties had ever been warned that the funds might be related to fraud or gambling. Subjective awareness cannot rest solely on the statement "they said they didn’t know," but neither can abnormal transactions lead to direct judgments without other evidence.

If the transaction does indeed have a legitimate purpose, one should also compile materials pertaining to study abroad, medical expenses, trade, salary income, contracts, invoices, customs logistics, and overseas account flows to clarify transaction objectives and fund sources.

If a bank card freeze, an exchange account freeze, a police summons, or a case investigation have already occurred, promptly save bank flows, exchange orders, wallet addresses, on-chain transaction hashes, chat records, transaction counterparty identities, and pricing and profit methods.

Do not summarize all facts with a single statement like "I just buy and sell currencies normally," nor should you preemptively delete chat records, contact relevant transaction personnel, or sign situation explanations or make reimbursement commitments before understanding the case nature, the amounts involved, and the source of funds, to avoid the loss of evidence or contradictions in factual statements.

Conclusion

USDT is merely a tool.

The real criminal risks arise when it is used to circumvent foreign exchange management, complete cross-border payments, transfer criminal proceeds, or hide the source of funds.

In cases involving USDT, the situation ultimately must return to the relationships between people, money, currency, and evidence: Is the party handling their own assets or others' funds? Is it a sporadic transaction or a long-term provision of exchange channels? Are they earning normal market price differences or currency exchange fees? Can they explain the transaction counterparties, source of funds, wallet addresses, and final destinations? After obvious anomalies and risk alerts arise, do they still continue to trade?

If you have already been investigated for issues such as USDT transactions, OTC trading, cross-border currency exchange, bank card freezes, illegal operations, concealing or disguising criminal proceeds, assisting or money laundering, the first step is not to look online for a simple "guilty" or "not guilty" answer, but to promptly clarify the trading roles, RMB fund flows, on-chain currency flows, account relationships, chat records, transaction hashes, and profit methods.

The Mankun criminal defense team has extensive experience handling cases involving virtual currencies, OTC trading, cross-border payments, card freezes, illegal operations, concealing or disguising criminal proceeds, assisting, and money laundering. They can assist parties and their families in determining whether the related actions fall under personal asset disposal, professional USDT trading operations, or have been interpreted by law enforcement as illegal currency exchange or channels related to illicit funds; additionally, in conjunction with the flow of funds, on-chain records, and account relationships, further clarify the amounts involved, subjective knowledge, and personal scope of responsibility.

The boundaries of cryptocurrency criminal cases ultimately lie in the specific facts. The earlier the relationships between people, money, currency, and evidence are clearly articulated, the more beneficial it will be to strive for an accurate case classification and liability determination.