Recently, a Shanghai court uncovered an illegal stablecoin network valued at 6.5 billion yuan. This operation highlights China's stringent control over cryptocurrencies.
Discovery of Illegal Stablecoin Network
The Shanghai court revealed an illegal stablecoin network valued at 6.5 billion yuan. The operation was run by Yang and Xu, who managed both domestic and international aspects of the business using USDT to circumvent Chinese regulatory norms.
Operations and Structure of the Network
Yang and Xu successfully avoided forex regulations by splitting transactions into separate operations. Yang handled international clients and funds allocation while Xu coordinated domestic operations. USDT was used extensively due to its price stability.
Market Reaction and Consequences
The operation had a significant impact on China's illegal stablecoin market, yet there were no major disruptions in the values of USDT, BTC, or ETH, highlighting the isolated nature of this network. The court emphasized that such mechanisms violate regulatory provisions by splitting what should be a single regulated forex transaction. Gao Yongfeng commented, "This illegal exchange mechanism splits what should be a single, regulated forex transaction into two separate operations, thereby evading regulatory oversight."
This case sets a precedent for further enforcement. The ongoing use of stablecoins like USDT to circumvent China's forex rules remains prevalent, necessitating a reevaluation of compliance strategies both domestically and internationally.
