Shanghai Court Unveils $6.5 Billion USDT Forex Case

On July 20, 2025, the People’s Court of Pudong New Area in Shanghai revealed a substantial case of illegal foreign exchange transactions involving USDT. This operation exposed a three-year, $6.5 billion covert forex setup with domestic shell companies.

The disclosure of this case highlights the continued challenges in enforcing China’s capital controls amid increasing adoption of cryptocurrencies like USDT. The involved parties skillfully bypassed regulatory scrutiny, casting a spotlight on legislative gaps.

Shanghai Cracks Down on $6.5 Billion USDT Forex Scheme

The Shanghai court reported illegal foreign exchange dealings via USDT, executed by Yang and Xu through shell companies. Yang, abroad, managed foreign clients; Xu handled domestic transactions with daily flows in the millions, revealing coordinated efforts. Prosecutors have confirmed that the criminal operation exploited stablecoins to bypass currency restrictions. As Gao Yongfeng, Senior Partner at Shanghai Jinli Law Firm, noted, “This illegal exchange mechanism splits what should be a single, regulated forex transaction into two separate operations, thereby evading regulatory oversight.” This clandestine means of cross-border fund transfer through intricate pathways reveals vulnerabilities in tracking stablecoin transactions.

Authorities in Shanghai emphasize their commitment to combating unlawful forex trading through cryptocurrency channels. Official statements reveal a broader crackdown on illicit cross-border transactions using digital assets, showing China’s firm stance on maintaining capital flow regulations.

According to CoinMarketCap, Tether USDt (USDT) maintains a stable price of $1.00 with a total market cap of approximately $161.65 billion and a trading volume of $90.81 billion, even amid a volatile market environment. The asset’s dominance reflects its widespread use for transactions, despite legal challenges.

Stablecoin Scrutiny and Regulatory Challenges in China

Did you know? In 2020, Chinese authorities cracked down on similar schemes in Beijing and Chongqing, predominantly using stablecoins like USDT for unauthorized transfers, amounting to billions in illegal forex dealings.

The Coincu research team speculates that increasing regulatory scrutiny may lead to stricter controls on digital asset transactions in China, potentially impacting their global portability and acceptance. However, stablecoins like USDT, given their liquidity and pegged value, remain instrumental for cross-border trade and remittance.

The Coincu research team speculates that increasing regulatory scrutiny may lead to stricter controls on digital asset transactions in China, potentially impacting their global portability and acceptance. However, stablecoins like USDT, given their liquidity and pegged value, remain instrumental for cross-border trade and remittance.