China Sentences Five for Using Crypto to Bypass FX Controls

Shanghai's Jing'an District People's Procuratorate said five people were sentenced for running an illegal foreign exchange operation that used cryptocurrency. Prison terms ran from 2.5 years to six years, the procuratorate said in its June 29 WeChat post.

China banned cryptocurrency trading in 2021 and maintains strict controls on cross-border capital flows. Using digital assets to transfer money abroad violates foreign exchange rules and can draw criminal charges. The procuratorate's statement described the operation as using cryptocurrency to conduct foreign exchange transactions outside state channels. The case was publicized on the procuratorate's official WeChat account, a common channel for Chinese authorities to announce enforcement actions.

China's foreign exchange regulations, administered by the State Administration of Foreign Exchange, prohibit unauthorized currency conversion and cross-border transfers. Cryptocurrency is not recognized as legal tender, and using it to move value across borders falls under those restrictions.

The procuratorate did not disclose the volume of funds involved or the specific digital assets used. The Jing'an District People's Court imposed the sentences. The individuals were not named in the post.

The case adds to the regulatory risk picture for crypto markets.