Crackdown on Illegal Currency Exchanges in Shanghai
In a significant crackdown on illegal foreign currency exchanges, authorities in Shanghai, China, have revealed a case involving an astonishing 6.5 billion RMB being exchanged using stablecoins—specifically, USDT. The operation was orchestrated by individuals, including Yang and Xu, who exploited accounts from various domestic shell companies to route stablecoins to foreign accounts for undisclosed clients. This method enabled a series of cross-border transactions aimed at generating profits over the last three years.
Details of the Operation
The investigation highlighted a well-structured operation where Yang, who managed operations from abroad, concentrated on attracting clientele and overseeing foreign exchange funds. Meanwhile, Xu took charge of the domestic aspects, managing accounts for 17 shell companies that handled staggering daily cash flows, sometimes surpassing tens of millions RMB. This delineation of roles pointed to a tightly coordinated effort between the two.
Case Study: Ms. Chen’s Experience
A particular instance emerged when Ms. Chen, a local resident in Shanghai, sought to send money to her daughter studying overseas. Due to existing foreign exchange restrictions in China, she turned to what she believed was a legitimate overseas exchange company—a front for the aforementioned shell operation controlled by Yang and his cohort. After following the company’s instructions, Ms. Chen transferred her funds directly into the shell company’s bank account, which then converted these RMB into foreign currency for her daughter, after deducting a processing fee.
Conclusion
The network had cleverly masked its illicit activities by presenting themselves as a “third-party collection and payment” service, facilitating illegal currency exchanges through cross-border matching transactions.
As authorities continue their investigation, this case underscores the challenges posed by such clandestine operations and the importance of regulatory oversight in the forex market.
