China jails Sifang operators over $428M USDT gambling network

Share Link copied Chinese courts have sentenced five Sifang payment platform operators to between three and six years in prison over a gambling network that processed more than 2.95 billion yuan, or about $428 million, through USDT, bank cards and third-party payment accounts. Summary Chinese courts sentenced five Sifang operators to between three and six years.

The network processed about $428 million through USDT, bank cards and payment accounts. Investigators used Tether wallet data and OKX records to trace crypto transactions. The Paper reported that the Intermediate People’s Court of Xilin Gol League in Inner Mongolia upheld Ma’s conviction for illegal business operations on June 26, leaving his four-and-a-half-year prison term and 3 million yuan fine in place.

Ma’s case was the last judgment in a group of prosecutions linked to Sifang, a fourth-party payment operation that supplied payment channels to online gambling businesses. The court also ordered authorities to recover 2.95 million yuan in illegal income from Ma.

Court records cited by The Paper showed that Ma and four other defendants processed illegal payments between May 24, 2022, and Oct. 18, 2023. The operation moved funds through 105 merchant accounts connected to 10 third-party payment companies.

You might also like: US House passes congressional stock trading ban despite loophole concerns Some defendants received commissions or rebates through USDT wallets, while other payments went through bank cards, according to the records. Prosecutors treated their work as unlicensed payment settlement activity and charged them with illegal business operations. Zhu received a five-year prison term and an 800,000 yuan fine, while Zhang was sentenced to six years and fined 850,000 yuan.

The other defendants received terms ranging from three to six years, The Paper reported. Sifang linked gambling sites to payment channels According to the first judgment in the series, Zhu, Zhang, Tang, Du and Ma began building the operation in May 2022 after learning that payment services for gambling platforms could generate large profits. Court documents said the group commissioned 32 collection and payment platforms, rented servers outside China and contacted people running overseas gambling websites.

Those systems connected the gambling businesses with merchant accounts held at established third-party payment companies. Sifang operated as a fourth-party, or aggregated, payment service rather than a licensed payment provider, according to The Paper. Such platforms combine payment interfaces supplied by banks and third-party processors, allowing merchants to collect funds through several channels from one system.

Investigators said Zhu and Zhang managed payment routes, coordinated with third-party providers, handled complaints and arranged profit distribution. Ma introduced payment channels, supplied merchant registration materials and helped merchants open accounts with third-party payment companies. Ma also introduced intermediaries and dealt with problems that arose while merchant applications and fund transfers were being processed, according to the court findings.

Prosecutors initially alleged that the group earned 42.85 million yuan by taking a 1.45% commission from merchant transfers linked to overseas gambling websites.

However, the courts attributed much smaller final profit amounts to several defendants. Judicial records showed that one wallet associated with Zhang received 4.146 million USDT through 485 deposits between July 2022 and October 2023.

The same records valued those deposits at about 26.95 million yuan. Another wallet sent out 4.

097 million USDT through 497 transfers, while Zhu, Zhang and Du also converted 1.905 million USDT into cash through 11 offline transactions. The court valued those cash conversions at roughly 12.

38 million yuan. For Ma, records obtained from the OKX application showed 152 transfers totaling 719,176.7 USDT into a wallet he supplied.

The court valued those tokens at approximately 4.67 million yuan and deducted 1.72 million yuan returned by a co-defendant, leaving Ma with 2.

95 million yuan in recognized illegal proceeds. USDT records test China’s evidence rules Investigators in Erenhot obtained wallet addresses from Tether and transaction details from OKX while building the case, The Paper reported. Wang Xiaohua, an associate professor at East China University of Political Science and Law, told the publication that linking traceable blockchain transfers to real people remains difficult when tokens do not pass through an exchange with identifying records.

Ma’s lawyer argued that investigators had not established how many payment accounts Ma handled or explained the purpose of more than 100 USDT transfers. The Paper said it sought comment from the Xilin Gol court on the evidence, valuation and cross-border data collection questions but received no response before publication. The ruling follows calls from Chinese legal schola