Chinese courts have sentenced five people linked to Sifang, a fourth-party payment network that allegedly helped online gambling businesses move more than 2.95 billion yuan, or about $428 million, using USDT, bank cards, and merchant accounts.
- Five operators sentenced to three to six years
- More than 2.95 billion yuan in alleged transaction volume
- USDT, bank cards, and payment accounts used together
- Tether and OKX records reportedly helped investigators trace flows
The case centers on Sifang, described by The Paper as a “fourth-party, or aggregated, payment service” that sat between gambling operators and payment rails. In plain English, it was a payment-broker layer that routed money for businesses that were not supposed to be using those channels in the first place.
The Intermediate People’s Court of Xilin Gol League in Inner Mongolia upheld Ma’s conviction on June 26 for illegal business operations. Ma was sentenced to four-and-a-half years in prison and fined 3 million yuan, while the court ordered authorities to recover 2.95 million yuan in illegal income from him.
Other defendants were also jailed. Zhu received five years and an 800, 000 yuan fine, Zhang got six years and an 850, 000 yuan fine, and the remaining defendants received terms ranging from three to six years.
That 2.95 billion yuan figure is network volume, not profit. Prosecutors initially alleged the group earned 42.85 million yuan by taking a 1.45% commission from merchant transfers linked to overseas gambling websites. Ma’s personally recognized illegal income, by contrast, was later set at 2.95 million yuan after deductions.
Those distinctions matter. Crypto crime reporting gets sloppy fast when transaction volume, alleged commission, and defendant-specific proceeds get tossed into the same bucket. They are not the same thing, and courts do not treat them the same way.
According to court records reported by The Paper, the operation processed payments between May 24, 2022, and Oct. 18, 2023. The network moved funds through 105 merchant accounts tied to 10 third-party payment companies. The group also began building the operation in May 2022, commissioned 32 collection and payment platforms, rented servers outside China, and contacted operators of overseas gambling websites.
The money trail itself was messy, which is exactly the point. One wallet associated with Zhang received 4.146 million USDT through 485 deposits between July 2022 and October 2023. The deposits were valued at about 26.95 million yuan. Another wallet sent out 4.097 million USDT through 497 transfers.
Zhu, Zhang and Du converted 1.905 million USDT into cash through 11 offline transactions, worth roughly 12.38 million yuan. Ma’s wallet received 152 transfers totaling 719, 176.7 USDT, valued at approximately 4.67 million yuan.
After deducting 1.72 million yuan returned by a co-defendant, the court recognized 2.95 million yuan in illegal proceeds for Ma. That is the figure tied to his sentencing, not the overall network’s transaction total.
Investigators in Erenhot reportedly obtained wallet addresses from Tether (cryptocurrency) and transaction details from OKX. That matters because blockchain transfers can be visible on-chain, but the real-world person behind a wallet usually has to be linked through off-chain records such as exchange account data, withdrawal logs, and identity checks. A blockchain can show where funds moved; it does not magically name the human operating the wallet.
Wang Xiaohua, an associate professor at the East China University of Political Science and Law, was quoted as noting that linking blockchain transfers to actual people becomes difficult when funds do not pass through an exchange with identifying records. That is the core problem in a lot of crypto-related investigations: traceability is useful, but it is not the same thing as airtight attribution.
The Paper also reported that the Xilin Gol court was asked for comment on evidence, valuation, and cross-border data questions, but did not respond. That leaves some fair questions hanging, especially around how each defendant was tied to specific flows and how the evidentiary chain was assembled in full.
Chinese prosecutors and legal commentators have been blunt about the limits of current rules. As cited in the People’s Procuratorate Daily, crypto’s anonymous, decentralized and cross-border features complicate investigations, especially around criminal liability, evidence collection, and asset recovery. Those are not theoretical headaches. They are the exact pain points that determine whether a case sticks or falls apart.
The broader enforcement backdrop is also worth noting. China’s Supreme People’s Procuratorate said in June that authorities prosecuted over 1, 200 individuals prosecuted for drug-related money laundering between January 2025 and May 2026. In a separate case, officials said drug trafficker Li Mobo was sentenced to death after authorities found he laundered more than $7 million through cryptocurrency, though the death sentence covered multiple drug trafficking convictions and was not imposed for money laundering alone.
That tells you where China’s priorities are: gambling, drugs, and cross-border money movement are all being pressed under a much harder legal lens. Authorities are clearly using blockchain records and exchange data more aggressively. The state is not pretending crypto is invisible anymore; it is trying to turn the transparency of the ledger into a prosecutorial weapon.
At the same time, this case is a reminder that crypto is not the whole story. USDT was part of the machinery, but the real criminal architecture was the payment network built around it: merchant accounts, third-party processors, offshore servers, and cash-out routes. The token was a tool. The scheme was the crime.
That distinction matters. Too many lazy takes treat USDT like it is the villain in a black hat. It is not. It is a dollar-pegged stablecoin used widely for liquidity and settlement. In legitimate markets it is just plumbing. In the wrong hands, wrapped in shady payment infrastructure and gambling operations, it becomes a fast-moving conduit for ugly business.
Criminals do not care about crypto ideology. They use whatever works. Sometimes that means banks and cards. Sometimes it means merchant accounts. Sometimes it means USDT. Usually, it means all of the above, because the best way to hide a dirty trail is to make it look like ordinary financial noise.
Key questions and takeaways
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What was Sifang doing?
Sifang was described as a fourth-party, or aggregated, payment service that routed money for gambling businesses through merchant accounts, payment companies, and crypto transfers. It acted like a hidden settlement layer for illegal gambling-related payments. -
Was the $428 million the group’s profit?
No. That figure refers to the total transaction volume processed through the network. Prosecutors separately alleged 42.85 million yuan in commissions, and Ma’s recognized illegal income was 2.95 million yuan after deductions. -
Did investigators use Tether and OKX data?
Yes. Investigators in Erenhot reportedly obtained wallet addresses from Tether and transaction details from OKX, showing how issuer and exchange records can help connect on-chain activity to real-world accounts. -
What does this say about crypto tracing in China?
Chinese authorities appear increasingly willing to use blockchain records, exchange data, and payment-company records together. The catch is that tracing funds is easier than proving exactly who controlled every wallet. -
Does this mean USDT itself is illegal?
No. The alleged wrongdoing was the unlicensed payment and gambling-related activity wrapped around USDT, not the existence of the stablecoin itself.
The hard truth is that blockchain does not erase the old problems of criminal finance. It can make movement more visible, but it does not automatically solve identity, intent, or proof. In this case, Chinese authorities appear to have built a strong enough record to convict. The unanswered question is how transparent that evidentiary chain will ever be to everyone else.
And that is where the real fight sits: on-chain visibility is useful, but legal attribution still has to do the heavy lifting.
Further reading
A few closely related pieces that add more context to the money trail, enforcement angle, and USDT’s less glamorous use cases:
- China jails Sifang operators over $428M USDT gambling
- China Jails Sifang Operators Over $428M USDT Gambling
- Tracing Illicit Crypto Transactions: The Huione Group Case
- USDT Integration Sparks Surge in Casino-Linked Crypto
- US Treasury Seizes Nearly $1 Billion in Iran-Linked Crypto
- Tether Faces $344M USDT Seizure Lawsuit Over IRGC-Linked
- Tether Freezes $514M in USDT as Tron Becomes Blacklist
