Latest Determination Standards for Virtual Currency Money Laundering Crimes in 2025: Shanghai Police Launch Strict Crackdown — How Ordinary Users Can Avoid Legal Risks
In recent years, virtual currency has been exploited by criminals as a new tool for money laundering and fraudulent fund transfers due to its anonymity and cross-border transaction convenience. Shanghai police have recently reported multiple cases involving virtual currency money laundering, with massive amounts of money involved, drawing social attention. As legal practitioners, it is necessary for us to analyze the legal characterization and accountability standards of such conduct from a criminal law perspective, and to clarify legal boundaries for ordinary investors and users, so as to help them avoid inadvertently crossing legal red lines.
Trends in Cryptocurrency Money Laundering Cases and Legal Characterization
According to Shanghai police, in recently cracked money laundering cases, criminal groups used cryptocurrency trading platforms, overseas wallet addresses, and mixing services to convert illegal proceeds from telecom fraud and online gambling into stablecoins such as USDT, then completed the laundering process through multiple transfers, fund splitting, and cross-chain operations before finally converting to fiat currency. The flow of funds involved in these cases is highly concealed, making it difficult for traditional fund tracking methods to effectively monitor them.
From a legal characterization perspective, such conduct clearly violates Article 191 of the Criminal Law of the People's Republic of China, constituting the crime of money laundering. In 2020, the Criminal Law Amendment (XI) incorporated "virtual currency transactions" into the modes of conduct for the money laundering crime, explicitly listing "transferring funds through transfers or other payment settlement methods" and adding circumstances such as "cross-border transfer of assets." In 2024, the Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Money Laundering, jointly issued by the Supreme People's Court and the Supreme People's Procuratorate, further refined this by clarifying that conduct involving money laundering through virtual currency or digital asset transactions shall be convicted and punished as the crime of money laundering.
In judicial practice, the predicate crimes for money laundering include seven categories: drug crimes, organized crime of a mafia nature, terrorist activities, smuggling crimes, embezzlement and bribery crimes, crimes disrupting financial management order, and financial fraud crimes. If an actor knowingly knows that the funds originate from the proceeds of the aforementioned crimes and still assists in transferring or converting them through virtual currency transactions, they may constitute the crime of money laundering. It is worth noting that even if the predicate crime has not yet been convicted, as long as the existing evidence can prove the nature of the funds, the crime of money laundering can also be established independently.
Legal Risks for Ordinary Users in Virtual Currency Trading
Many ordinary investors believe that as long as they don't engage in criminal activities, buying and selling virtual currency is safe. But the reality is far more complex than imagined. In cases that have been investigated, many suspects claimed they were "just helping friends exchange coins" or "earning a small handling fee," unaware that they had already become entangled in the money laundering chain.
Under the Criminal Law, the establishment of the crime of money laundering requires that the perpetrator "knowingly" handles funds derived from criminal activity. However, "knowing" does not require exact knowledge but includes "should have known." In judicial practice, judges comprehensively assess factors such as the perpetrator's cognitive ability, transaction frequency, degree of abnormality, and profit situation. For example, frequently using personal accounts to receive large transfers and immediately purchasing cryptocurrency to transfer out, or rapidly moving assets between different platforms, may all be presumed as subjective knowledge.
Additionally, the crime of aiding information network criminal activities (the "aiding crime") is also a high-frequency offense. According to Article 287-2 of the Criminal Law, whoever knowingly provides payment and settlement assistance to others who use information networks to commit crimes, if the circumstances are serious, shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and shall also or solely be fined. In recent years, the number of cases involving convictions for lending bank cards or helping others transfer virtual currency has surged. The judicial interpretation of the aiding crime issued by the Supreme People's Court in 2023 clarifies that purchasing, selling, or renting out credit cards, bank accounts, non-bank payment accounts, internet account passwords with payment and settlement functions, as well as providing assistance in virtual currency transactions, can all be identified as "aiding" conduct.
Common pitfalls that ordinary people are most likely to fall into include: lending personal payment accounts to others for fund transfers, assisting in buying and selling cryptocurrency in "arbitrage" groups of unknown origin, providing collection and payment services for overseas platforms, and participating in "money-running" platforms. On the surface, these actions are merely "earning commissions," but in reality, they may constitute complicity in money laundering or the crime of aiding information network criminal activities, leading to criminal prosecution.
Criminal Liability of Virtual Currency Trading Platforms and Their Operators
In addition to individual users, virtual currency trading platforms, market makers, and over-the-counter (OTC) merchants also face serious criminal risks. China adopts a strict regulatory stance toward virtual currency trading. In 2021, the People's Bank of China and nine other government departments jointly issued the "Notice on Further Preventing and Addressing the Risks of Virtual Currency Trading Speculation," which explicitly stipulates that business activities related to virtual currency constitute illegal financial activities and are strictly prohibited in all forms.
If the platform provides services such as transaction matching, fund custody, or OTC exchange for money laundering activities, it may constitute an accomplice to the crime of money laundering. Even if the platform itself does not directly participate in money laundering, failing to fulfill anti-money laundering obligations—such as not conducting real-name authentication of users, not monitoring abnormal transactions, or not reporting large and suspicious transactions as required—may also trigger administrative penalties under the Anti-Money Laundering Law. The Anti-Money Laundering Law revised in 2024 strengthens the anti-money laundering obligations of financial institutions and non-bank payment institutions, brings virtual currency trading platforms within the scope of supervision, and imposes hefty fines on violators, with business licenses subject to revocation in serious circumstances.
For over-the-counter (OTC) merchants, if they engage in virtual currency trading as a long-term business without obtaining the relevant financial licenses, they may also be suspected of the crime of illegal business operations. According to Article 225 of the Criminal Law, operating without permission items that are exclusively managed, monopolized, or otherwise restricted from trading under laws and administrative regulations, thereby disrupting market order and with serious circumstances, constitutes the crime of illegal business operations. Although whether virtual currency trading falls under "restricted trading items" is theoretically controversial, in judicial practice, many OTC merchants have been convicted of money laundering or the crime of aiding information network criminal activities for assisting in the transfer of criminal funds.
Lawyer's practical advice: How to legally participate in virtual currency trading
Facing a stringent regulatory environment and criminal risks, how should ordinary investors and practitioners protect themselves? Based on practical experience, we offer the following recommendations:
First, stay away from any "high-return" projects of unknown origin. Anything that requires you to first purchase USDT and then invest, or promises stable high returns, is highly likely to be a money laundering or fraud trap. Legitimate investment channels will not require clients to conduct fund transfers through cryptocurrency.
Second, never lend your personal bank accounts, payment accounts, or cryptocurrency wallets to others for use. Even if the other party is an acquaintance, once the account is used for the flow of criminal funds, you will face the risk of criminal liability.
Third, when engaging in virtual currency-related transactions, be sure to keep complete transaction records, including chat logs, transfer receipts, contracts, and the like. If investigated by the police, being able to prove that you were "not knowingly" aware of the nature of the funds can help in arguing against arrest or prosecution.
Fourth, if you discover that your account has been used by others for abnormal transfers, you should immediately stop operations, report the matter to the public security authorities, and retain evidence. Proactively reporting and cooperating with the investigation can help mitigate legal liability.
Fifth, for parties already suspected of committing a crime, it is recommended to retain a professional criminal defense lawyer to intervene as early as possible. The defense space for the crime of money laundering and the crime of aiding information network criminal activities lies in the determination of subjective knowledge and the rebuttal of the severity of circumstances. Lawyers can strive for acquittal or lighter punishment by sorting out the transaction background, fund flows, and the party's cognitive ability.
Guangdong Zhiming Law Firm has深耕 the field of criminal defense for many years and has accumulated rich experience in new types of cases involving virtual currency and financial crimes. If you or your relatives and friends are facing related legal issues, you are welcome to consult us. We will provide you with professional legal opinions and defense strategies.
Virtual currency is not a lawless territory. Only by acting prudently within the legal framework can one avoid becoming a victim in the criminal chain.
