In 2024, mainland China's cryptocurrency landscape witnessed a dramatic shift. A wave of player withdrawals, account freezes, and even hefty fines—some reaching up to ¥500,000—have left many wondering: What’s really happening? The truth is far more serious than just market fluctuations.
Alipay, Bank Transfers & USDT: A Risky Mix
One of the biggest turning points has been the crackdown on USDT (Tether) transactions via platforms like Alipay, WeChat Pay, and traditional banking. Buying or selling USDT is now directly flagged as high-risk behavior, often equated with gambling or telecom fraud by China's automated risk control systems.
If you're caught in a USDT transaction:
You risk receiving calls from the local police station.
Investigations are triggered—even if your transaction is entirely legitimate.
Payment channels may be immediately frozen, cutting off access to basic crypto purchases.
This is not an isolated incident anymore; it's become the new normal.
Frozen Funds & Legal Nightmares
OTC (over-the-counter) trading, once a popular method to cash in or out of crypto in China, has become increasingly perilous. Bank cards involved in receiving funds from these transactions are being frozen without warning, especially if the system detects so-called “dirty money.”
Once frozen:
Users must report to police stations.
Detailed transaction histories and explanations must be provided.
In some cases, the user must return the funds to unfreeze their accounts.
And if the legitimacy of the funds can’t be clearly proven? Users may be accused of "aiding information network criminal activities", potentially facing legal charges despite being unaware participants.
Why Are Authorities So Harsh?
The anti-fraud crackdown in China has reached unprecedented levels. USDT has unfortunately become a key tool for scam gangs engaging in “pig-butchering” schemes and large-scale fraud, making it nearly impossible for authorities to distinguish criminals from ordinary traders.
This has led to a “better safe than sorry” approach:
Preemptive freezes and fines come first.
Innocent users are left to prove their legitimacy later—often after weeks or months of stress and bureaucracy.
A Market in Retreat
The result? A mass exodus from the crypto scene:
Old players are stepping back to avoid risks.
Newcomers are scared away before even entering.
Liquidity is drying up across OTC and P2P platforms.
Even attempts to bypass restrictions using overseas cards have failed. These too are increasingly flagged as “illegal currency exchange”, potentially leading to criminal charges.
The Real Cause: Regulation + Rampant Fraud
At the heart of China’s crypto market collapse lies a dual threat:
1. Regulatory Pressure: Tighter anti-fraud controls are stifling all USDT-related activities.
2. Fraud Explosions: Criminal abuse of crypto has tainted the entire system.
This combination has nearly killed off safe inflow and outflow routes, driving up costs and making casual trading nearly impossible.
What Comes Next?
Unless regulated, compliant exchanges can offer safer on/off ramps tailored for Chinese users, the current inactivity may persist. Many players are either turning to riskier underground channels or exiting altogether, waiting for a policy shift or more stable infrastructure.
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