Sichuan Court in China Tries Virtual Currency Forex Exchange Case Involving Over 200 Million RMB

BlockBeats News, July 30. From 2020 to 2021, the defendants Wan Moyuan, Chen Mouwen, and Huang Moyuan conducted illegal foreign exchange transactions outside of the regulated trading venues for profit. Wan Moyuan was responsible for contacting clients in need of US dollars and, through Chen Mouwen, contacting Huang Moyuan to transfer the corresponding amount of Chinese yuan or USDT (Tether, a cryptocurrency) purchased with Chinese yuan to the Chinese yuan receiving account or USDT receiving address provided by Huang Moyuan. Huang Moyuan used two Hong Kong company accounts under his control to transfer US dollars online to the receiving company account provided by Chen Mouwen and sent the US dollar transfer "receipt" (remittance certificate) to Chen Mouwen. After the transaction was negotiated or the US dollars were received, the clients transferred the Chinese yuan used to purchase US dollars to the bank account provided by Wan Moyuan or paid the Chinese yuan to Wan Moyuan through trade settlement, ultimately completing the transaction. According to the audit firm's findings, from November 2020 to March 30, 2021, Wan Moyuan and Chen Mouwen conducted illegal foreign exchange transactions outside of the regulated trading venues using the aforementioned method, receiving a total of 234.04 million Chinese yuan from clients for the purchase of US dollars.

The case was initially accepted by the People's Court of Muchuan County in Leshan City, Sichuan Province. The court believed that the nature of the case involved the recognition of the act of buying and selling foreign exchange using cryptocurrency as a medium of exchange. Due to regional differences in the understanding of the legality of cryptocurrency and the differing perceptions of the nature of such behavior in practice, there were divergent opinions on the nature of this behavior. Additionally, one of the defendants in the case was a Hong Kong resident who had repeatedly used cryptocurrency as a means of payment to transfer funds between different currencies to seek profit. Considering that the circumstances of this case were a new type within its jurisdiction and attracted high social attention, the case was submitted to the Intermediate People's Court of Leshan City, Sichuan Province for jurisdiction.

After trial, the Intermediate People's Court of Leshan City, Sichuan Province issued Judgment No. (2023) Chuan 11 Criminal Adjudication No. 24 on August 28, 2024: Engaging in illegal business activities by engaging in foreign exchange transactions outside of the regulated trading venues through the "Foreign Exchange-Cryptocurrency-Chinese Yuan" method, using cryptocurrency as a medium of exchange to achieve the value conversion between Chinese yuan and US dollars, engaging in disguised foreign exchange transactions, disrupting the financial market order, all constitute the crime of illegal business operations. Wan Moyuan was convicted of the crime of illegal business operations and sentenced to six years in prison, as well as a fine of 740,000 RMB. Wan Moyuan was also involved in other crimes and was sentenced to thirteen years and six months in prison, as well as a fine of 1.14 million RMB to be executed concurrently. Defendants Huang Moyuan and Chen Mouwen were convicted of the crime of illegal business operations and sentenced to five years and six months, and two years and six months in prison, as well as fines of 710,000 RMB and 250,000 RMB, respectively. After the first-instance verdict was announced, the defendants accepted the verdict. The Procuratorate did not appeal, and the judgment has taken legal effect. (Red Star News)