The Shanghai Prosecutor's Office in China has cracked a virtual currency cross-border triangular arbitrage foreign exchange case, involving an amount exceeding 200 million yuan.
BlockBeats News, July 1st. According to the People's Procuratorate of Jing'an District, Shanghai, China, recently, the procuratorate has filed a public prosecution against Li, a member of a criminal group involved in illegal business operations, on suspicion of conducting illegal operations, for using cryptocurrency for cross-border manipulation to illegally exchange foreign currency. On June 10th, the case was heard in court and a judgment was rendered on the spot, bringing to a close a series of illegal business operations spanning 3 years and involving over 200 million yuan. In July 2024, the State Administration of Foreign Exchange discovered abnormal clues during routine monitoring of Company Z, indicating that the company was using cryptocurrency to transfer assets abroad for domestic customers. Subsequently, the case was transferred to the public security organs for handling. Investigation revealed that Company Z was established overseas in 2019, promoted itself under the guise of a "private bank," developed a virtual bank app to create a legitimate facade, but did not obtain the necessary approval to conduct foreign exchange operations in China, and was actually engaged in illegal foreign exchange activities.
The group targeted high-net-worth individuals overseas with funding needs for real estate purchases, immigration, and studying abroad, and through intermediaries, the group's staff, including account managers, traders, and customer service personnel, facilitated the exchange process. Clients purchased cryptocurrency from a Chinese cryptocurrency exchange with RMB, transferred it to Company Z's overseas virtual wallet, and the group then converted the cryptocurrency into foreign currency abroad, transferring it to the client's designated overseas account. Throughout the process, there was no actual cross-border movement of funds, but settlement was made separately through domestic and overseas fund pools. Company Z charged a 3% foreign exchange service fee and paid a 0.5% kickback to the intermediaries.
A total of 9 individuals were arrested in this case, with one main suspect still under investigation. Upon review, it was found that the individuals involved collectively violated national laws, engaged in illegal foreign exchange trading, disrupted financial order, with circumstances deemed serious or especially serious, warranting criminal prosecution for the crime of illegal business operations. The court sentenced Gao and Li among others to imprisonment ranging from six years to two years and six months, and imposed fines ranging from 1.5 million yuan to 300,000 yuan; while Chen, Huang, and 4 others, due to less severe criminal circumstances, relatively small amounts involved, and voluntary confession and surrender, were not prosecuted accordingly in accordance with the law.
