This article reviews several recent judicial cases related to cryptocurrencies in China, analyzing charges of illegal operation, money laundering, fraud, and pyramid schemes. Through real judgments, it reveals the serious legal risks and criminal liabilities hidden behind activities such as issuing tokens, OTC trading, and stealing cryptocurrency assets. This article is derived from a piece written by Wenser and is organized, translated, and authored by Odaily Planet Daily. (Background: China's 'Stablecoin Ban' prohibits people from discussing: choking the Dollar ghost and quietly building the RMB Ark in Hong Kong) (Supplementary Background: Why has China's cryptocurrency ban 'persisted'? A review of the 10-year evolution of fake news in the cryptocurrency market) The cryptocurrency industry has long been a dark forest where one must guard against on-chain security threats while also being wary of the legal swords of the real world. Especially for young people who are inexperienced, the boundaries of criminal risks behind activities such as issuing tokens, OTC trading, and manipulating liquidity pools are often poorly understood. To enhance risk prevention awareness, Odaily Planet Daily will sort through typical domestic judicial cases involving cryptocurrencies in recent years and analyze key legal risk points (Note: This article is for reference only and does not constitute legal advice; specific provisions are subject to official interpretations). Charge 1: Reselling foreign exchange constitutes illegal operation, with an amount involved exceeding 200 million yuan. The Supreme Court released a typical case showing that the Leshan Intermediate Court in Sichuan elevated the trial of a case involving the illegal buying and selling of foreign exchange using USDT. Between 2020 and 2021, a person named Wan and others illegally traded foreign exchange through 'RMB - USDT - USD', with an amount involved exceeding 234 million yuan. The court determined that this constituted illegal operation, and the principal offender Wan was sentenced to 13 years and 6 months in prison and fined 1.14 million yuan; defendants Huang and Chen were sentenced to 5 years and 6 months, and 2 years and 6 months in prison respectively, and fined 710,000 yuan and 250,000 yuan. After the first-instance ruling, the defendants accepted the judgment, and the prosecution did not appeal; the judgment has taken legal effect. There are also two other cases of illegal operation, which are listed here: The first, in December 2022, the Dapu County People's Court ruled on a cash trading virtual currency case, sentencing the principal offender Chen to eight months in prison for illegal operation and fined 20,000 yuan; the accomplice Li was sentenced to six months and ten days in prison and fined 1,000 yuan; and the illegal gains of 5,101,770 yuan were confiscated and turned over to the national treasury. It is understood that Chen started the cash trading of virtual currency business in November 2021, purchasing USDT from retail investors he knew and reselling it to buyers, earning a price difference. The transaction prices were set by the buyers, who compared the price of one U coin with the daily market price of other virtual currencies to calculate the profitable price. Since each transaction involved a large amount of cash, Chen was afraid of being robbed and hired Li to escort the cash transactions with retail investors as a bodyguard. After the court's review, it was believed that Chen and Li used the form of buying and selling virtual currencies to indirectly buy and sell foreign exchange, with serious circumstances, thus constituting illegal operation. The second case involved three individuals born after 1995 who used virtual currency trading as a medium to engage in foreign exchange 'business', completing over 650 transactions in just a few months, exchanging nearly 30 million yuan in foreign exchange. The Jianhu County Prosecutor's Office brought charges, and the court ultimately sentenced Lin and two others to prison terms ranging from 5 years to 1 year and 6 months, along with fines. Prosecutors reviewed that Lin and the others used virtual currency as a medium to provide cross-border exchange and payment services to earn the difference in exchange rates, thereby circumventing national foreign exchange regulations, affecting the effectiveness of foreign exchange management and the stability of legal exchange rates, and disrupting the normal order of the financial market, and should be held criminally liable for illegal operation. Odaily Planet Daily's sharp commentary: It is well known that domestic foreign exchange control regulations limit individuals to an annual exchange quota of about 50,000 US dollars, while the decentralization and anonymity of cryptocurrencies provide certain conveniences for foreign exchange processing and trading, thus posing certain legal risks. The first case involved a huge amount and a long criminal time span, thus being used as a typical case of accurate legal application, appropriate adjudication guidance, and significant demonstration meaning. The second and third cases were similar in circumstances but received relatively lighter penalties due to relatively lighter circumstances. Charge 2: Money laundering, with a bank flow of 25,000 yuan and illegal profits exceeding 5,000 yuan. The Liyang People's Court in Jiangsu Province ruled on July 26, 2024, in a virtual currency money laundering case. A jobless man named Xiao Wu was sentenced to six months in prison, with a one-year probation, and fined 2,000 yuan for participating in money laundering activities involving virtual currency. The case showed that in November 2023, Xiao Wu, to repay credit card debts incurred from investing in foreign exchange and virtual currencies during university, contacted a 'money laundering company' via Telegram. He purchased U coins on a trading platform and then transferred and sold them through the 'U-MATOU' app, earning a price difference. On December 22, 2023, the Liyang Public Security Bureau received a report from a citizen who claimed to have been defrauded of 3,830 yuan through 'order brushing'. Preliminary investigations revealed that 2,520 yuan was transferred to Xiao Wu's bank card, which involved Xiao Wu's bank card. Investigation showed that Xiao Wu's bank account had a total flow of 13 transactions, amounting to more than 25,000 yuan, with illegal profits exceeding 5,000 yuan. Odaily Planet Daily's sharp commentary: Money laundering is also one of the high-frequency crimes in the cryptocurrency industry, regardless of whether in China or abroad, regardless of the scale or background of the individuals involved, there is a certain risk of money laundering, especially when individuals use their bank cards to help domestic and foreign illegal companies transfer funds, which can easily constitute the crime of assisting in money laundering. Charge 3: Fraud, post-2000 university student issues 'Dogecoin' and immediately withdraws liquidity, sentenced to 4 years and 6 months and fined 30,000 yuan. A post-2000 university student, Yang Qichao, issued 'Dogecoin' BFF on the BNB Chain, and due to withdrawing liquidity caused losses of 50,000 USDT to others, was identified as committing fraud by the Nanyang High-tech Industrial Development Zone People's Court in Henan, sentenced to 4 years and 6 months in prison, and fined 30,000 yuan. On May 20, 2024, the case was heard in the Nanyang Intermediate People's Court for the second trial. Yang Qichao's defense lawyer still defended him as not guilty, arguing that the virtual coin issued by the defendant Yang Qichao had a unique and unalterable contract address, and there was no so-called 'fake coin', and both the defendant and the complainant were experienced players in the crypto circle, with a clear understanding of the risks of speculating in virtual coins. In addition, the platform allows liquidity to be added or withdrawn at any time, and the defendant's behavior did not violate platform rules. Furthermore, the BFF coins held by the victims appreciated due to increased liquidity after the incident, and if traded, they could be exchanged for more USDT coins than before, so the victims did not incur any losses. Born in 2000, Yang Qichao was a senior student about to graduate from a university in Zhejiang before the incident. In early May 2022, he noticed a community autonomous organization called 'Blockchain Future DAO' for promoting the issuance of decentralized virtual tokens. He created a token named BFF identical to the English name of 'Blockchain Future' and added liquidity of 300,000 BSC-USD and 630,000 BFF. At the same second Yang Qichao added liquidity, Luo spent 50,000 USDT to exchange for 85,316.72 BFF.

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