- Shanghai sentenced five people over $29.4M crypto foreign exchange scheme.
- Authorities uncovered network serving wealthy clients using blockchain concealing transfers.
- China investigated hundreds of forex violations targeting underground banking networks.
A Shanghai court has sentenced five people to prison for using cryptocurrencies to facilitate more than $29.4 million in illegal cross-border foreign exchange transactions, marking another major enforcement action against underground financial networks in China. The Shanghai Jingan District People’s Procuratorate announced that authorities arrested nine people in connection with the case. Five defendants received prison terms ranging from two and a half years to six years. The court also imposed fines between 300,000 yuan, or about $44,150, and 1.5 million yuan, or roughly $220,780.
Investigators linked the operation to a company that illegally transferred funds overseas for domestic clients through cryptocurrency transactions. Authorities found that the network moved more than 200 million yuan, equivalent to approximately $29.4 million, over a three-year period. The investigation began after the State Administration of Foreign Exchange detected suspicious transactions involving the company in July 2024. Officials later uncovered a structured operation that provided unauthorized foreign exchange services to wealthy clients seeking to move money abroad.
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Wealthy Clients Used Crypto to Bypass Currency Restrictions
Prosecutors said the network primarily served high-net-worth individuals who wanted to purchase overseas property, finance education abroad, or emigrate. Additionally, the group expanded its business through a network of agents who introduced clients and coordinated transactions across multiple locations.
Instead of using regulated banking channels, the organization allegedly relied on cryptocurrency transfers to complete cross-border payments. Prosecutors explained that blockchain transactions helped disguise the movement of funds, making it more difficult for investigators to trace the money and gather evidence.
Moreover, prosecutors stressed that electronic evidence remains essential in cryptocurrency-related investigations because digital records can disappear if authorities fail to secure them quickly. They added that preserving blockchain evidence often determines whether prosecutors can successfully build a criminal case.
One defendant, identified only by the surname Gao, worked as the company’s domestic client manager. Prosecutors said Gao handled more than 170 million yuan, or nearly $25 million, in illegal foreign exchange transactions. Gao later left the company and launched a separate currency conversion business that continued offering similar services.
China Maintains Pressure on Underground Banking
China continues enforcing strict foreign exchange controls that limit citizens to converting or remitting the equivalent of $50,000 each year. Consequently, authorities have increased efforts to disrupt underground banking networks that use alternative payment methods to bypass those restrictions.
SAFE reported that it investigated more than 400 foreign exchange-related violations during the first half of 2025. Furthermore, the agency cooperated with law enforcement authorities to penalize more than 180 underground banking cases during the same period.
The Shanghai case reflects China’s continued efforts to target cryptocurrency-assisted financial crimes while strengthening oversight of illegal cross-border fund transfers. The prison sentences underscore China’s ongoing campaign against illegal foreign exchange activities involving digital assets. Authorities also signaled that blockchain evidence and electronic records will remain central to future investigations targeting underground financial networks.
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