Key Highlights

  • Five defendants received sentences of five to six years for using crypto to move $29.4 million across borders, bypassing China's strict annual capital transfer limits.

  • The defendants were not punished for holding crypto but for running an unlicensed foreign exchange operation, a distinction Chinese courts have maintained as personal crypto ownership gains limited property-like recognition.

  • The case follows a pattern of escalating enforcement in China; a 2025 Beijing ruling involved $166 million in similar cross-border crypto laundering using USDT stablecoins.

A Shanghai court has sentenced five individuals to between five and six years in prison for using cryptocurrency to conduct $29.4 million in unauthorized cross-border foreign exchange operations, according to reports.

The case centered on using digital assets as a channel to move money across borders in ways that circumvent China's tight annual limits on how much capital citizens can transfer out of the country. Cryptocurrencies were used as an intermediary to convert domestic currency, transfer funds internationally, and convert them back, effectively running an unlicensed foreign exchange business without authorization.

China has maintained a blanket ban on commercial crypto activity since 2021, when regulators declared all cryptocurrency transactions illegal and shut down domestic exchanges and mining operations. Courts have at times acknowledged that digital assets like bitcoin carry property-like legal status for personal holdings, but the prohibition on using crypto commercially or as a capital movement tool remains firmly in place. The defendants were not charged for personal ownership of digital assets.

The Shanghai case follows a pattern of escalating enforcement across Chinese jurisdictions. A 2025 Beijing ruling involved $166 million in similar cross-border money movement using USDT stablecoins. The identities of the five defendants, the specific cryptocurrencies used, and the blockchain protocols involved were not publicly disclosed in initial reporting.