Not understanding these 3 traps and getting involved in UCoin trading scams can lead to imprisonment.

Recently, a shocking legal case has been circulating in the crypto community: a friend was sentenced to three years in prison for buying and selling USDT with a bank card to profit from price differences. His account had a transaction volume of up to 6.8 million yuan. The charge was “concealing and disguising criminal proceeds.” This case reveals legal risks that many ordinary traders overlook—what you think is legal trading may actually make you an accomplice to crime. Why do transactions related to USDT scams cross legal boundaries? The answer lies in these three criminal law provisions.

Real Cases Highlighting USDT Scam Risks

China’s criminal law increasingly clarifies the nature of over-the-counter (OTC) virtual currency transactions. Based on recent cases:

Case 1: Consequences of receiving scam funds

Trader B sold 100,000 USDT. The buyer appeared to be an ordinary customer, but in reality, was part of a scam gang. When the illicit nature of the funds was uncovered, B was sentenced to 1.5 years for “assisting cybercrime.” He was unaware he was aiding in transferring stolen money.

Case 2: Continuing transactions with knowledge

In a more extreme example, A knew the buyer was a money laundering group but continued trading for a profit margin of 2.4 million yuan. The final sentence was 3 years and 2 months. This is no longer a simple civil dispute but a criminal offense.

Case 3: Running a platform with disastrous consequences

Trader C operated an OTC platform mediating USDT transactions, with a single transaction exceeding 300 million yuan. He was sentenced to 5 years for “illegal business operation.” Professionally trading USDT is akin to a form of foreign exchange trading, with even stricter legal penalties.

Concealing and Disguising Crime: Continuing to Trade Despite Knowing

This is defined under Article 312 of the Criminal Law and is one of the most common legal traps. The core standard is: Do you know the funds come from crime?

Many think, “As long as I didn’t participate in the scam, I’m safe,” but the reality is harsh—indirectly transferring stolen funds is also illegal. If prosecutors can prove you “should have known” or “knew” the funds were abnormal, you can be convicted. What constitutes “should have known”? Includes situations like:

• Using anonymous communication tools (e.g., Telegram) with trading counterparts
• Large, frequent transfers
• Requests like “fast deposit,” “no official bank channels,” or other unusual demands
• Lack of reasonable commercial explanation

Once these signs are present, continuing the transaction means you’re no longer an innocent intermediary but someone who “knew” about the criminal funds flow.

The Red Lines of USDT Transactions: Aiding and Illegal Business

Helping with information (Criminal Law Article 287) targets assisting others in committing cyber or online crimes. If your account receives funds from telecom or online scams, you become an accomplice. This charge usually carries a penalty of up to 3 years, but applies when the scam involves organized groups. Small amounts may not qualify, but if the amount reaches criminal prosecution thresholds, consequences are severe.

Illegal business operation (Criminal Law Article 225) targets professional traders. If you treat USDT buying and selling as your main business—whether running a platform or acting as a market maker—you are engaging in “illegal foreign exchange trading.” Penalties can reach over 5 years. Among the three charges, this is the most severe.

Though these three charges seem different, they share a common feature: None require direct participation in scams or money laundering—if you are part of the fund flow chain, you may be deemed a crime.

Many “Safe” Operations Are Actually Illegal

Many traders have their own “risk control” theories, but reality often proves them wrong:

Myth 1: “As long as I didn’t participate in scams, I’m safe”

This is a major misconception. The law doesn’t consider your subjective intent—only whether you participated in fund transfers. Concealing and disguising crime applies to situations of “unwitting involvement.”

Myth 2: “Cash transactions are safer”

Large cash sources of unknown origin also risk money laundering. Authorities have long mastered techniques to identify OTC transactions. Large, frequent cash dealings are under heavy surveillance.

Myth 3: “Trading only with acquaintances is risk-free”

What if your trusted contacts get caught? Your transaction records can be scrutinized, especially if there are multiple high-value trades. Law enforcement can trace the fund chain; relationships are not a shield.

Myth 4: “Bank unfreezing means no problem”

Bank unfreezing indicates the bank no longer restricts your account, but it doesn’t mean authorities have abandoned investigation. Civil freezes are lifted, but criminal investigations may still be ongoing.

Standard of Evidence: One Scam Fund Is Enough

Prosecutors’ standards for establishing a crime are surprisingly low:

1. A single instance of scam funds suffices. You don’t need to know the full truth—just one transaction involving scam money can be enough.
2. High volume + frequent transactions. Over 200,000 yuan in OTC transactions can trigger investigation; continuous monthly trading over 1 million yuan is especially scrutinized.
3. Use of encrypted communication tools. Using Telegram, Signal, etc., for negotiations can be deemed “knowing” and “concealing.”

These standards may seem vague, but enforcement is very specific in practice. Many only realize they are at risk when investigated.

Three-Step Self-Help When Under Investigation

If you are unexpectedly summoned by police, follow these steps to protect yourself:

Step 1: Confirm identity and understand your rights

Request to see the officer’s credentials to verify their identity and authority. This is not confrontation but exercising your rights lawfully.

Step 2: Carefully review before signing

Before signing any statements or confessions, read every word carefully—especially clauses related to “admitting guilt” or “repentance.” Once signed, it becomes legal evidence; regret is too late.

Step 3: Immediately consult a lawyer

Do not try to argue or explain yourself in front of police. A professional lawyer can help you assess legal risks and guide your responses. This is the most crucial step.

If you are already under formal investigation, prepare these materials:

• Original bank statements with official seals, showing legitimate sources and flows of funds
• List of transaction counterparts, with as much detail as possible
• Proof of legitimate fund sources—pay slips, investment returns, dividends, etc.

Legal Reminders: Boundaries of USDT Scam Recognition

Finally, keep these three points in mind:

1. The legal status of USDT: USDT is virtual property, but not legal tender in China. Large transactions involving USDT are viewed as foreign exchange dealings, subject to stricter regulation.

2. Professional trading equates to illegal forex: If you treat USDT trading as a daily business—systematic market making or arbitrage—this is no longer “investment” but “pseudo-foreign exchange,” and Criminal Law Article 225 applies.

3. Continuing after receiving scam or laundering funds implies “knowing”: Once you receive scam or laundering proceeds and continue trading, it is presumed you “knew” about the illicit origin. The law leaves little room for ignorance.

OTC trading carries risks far beyond many people’s expectations. Every seemingly ordinary USDT trade may hide legal traps. The best way to protect yourself is to stay far away from this gray area.