Attorney Shao Shiwei | Does Buying and Selling USDT Virtual Assets to Earn Price Differences Constitute the Crime of Impairing Credit Card Management?

Does the acquisition of other persons’ bank cards independently constitute a criminal offense?

Special Disclaimer: This article is an original work by Attorney Shao Shiwei. It reflects only the author’s personal views and does not constitute legal advice or a legal opinion on any specific matter. For article reprints, legal consultations, or business exchanges, please add: sswls66

These days, if your bank account has never been frozen, you might hardly dare to claim that you are engaged in USDT trading.

Buying and selling USDT virtual assets to earn spread profits was originally a money-making avenue known only to a few. However, due to the large-scale infiltration of this “track” by criminals engaged in illegal and gray-market activities, USDT traders who unfortunately receive illicit funds when selling USDT may face consequences ranging from the freezing of their bank accounts to potential criminal liability for offenses such as aiding information network criminal activities or concealing or disguising the proceeds of crime.

Therefore, to mitigate their own risks of account freezes and criminal exposure, many USDT traders use other persons’ bank cards to receive payments. In judicial practice, however, this conduct may trigger another criminal charge: the crime of impairing credit card administration.

Author of this article | Attorney Shao Shiwei

01 Case Introduction

1. Using Other Persons’ Bank Cards to Receive Payments Resulted in Conviction for the Crime of Impairing Credit Card Administration[i]

In order to trade USDT, Zhu contacted six university students in succession and arranged for them to open a total of 12 bank cards at two banks, with each card priced between RMB 300 and RMB 600. After obtaining the bank card numbers, names, passwords, and the mobile phone numbers reserved at the banks during account opening from these six individuals, Zhu linked the aforementioned bank cards to the students’ corresponding Alipay accounts.

Subsequently, Zhu was apprehended by public security organs on suspicion offraudApprehended and brought to justice.

The court ultimately held that Zhu, knowing the credit cards belonged to others, illegally possessed them in a relatively large quantity, and his conduct constitutedthe crime of impairing credit card administration, for which he was sentenced to seven months’ fixed-term imprisonment.

Note: The foregoing essentially comprises all the information contained in the judgment. Although Zhu was initially charged with fraud, the outcome of this case suggests that Zhu did not receive proceeds of crime from his buying and selling of virtual assets; otherwise, the charge would not have been as stated.

2. Assisting Another Person in Purchasing USDT Results in Convictions for Two Offenses[ii]

Huang met “Da Long Ge” online. “Da Long Ge” asked Huang to help him purchase USDT (“U”), and Huang agreed, expecting to earn handling fees. After receiving RMB 137,000 transferred by “Da Long Ge,” Huang used those funds to purchase USDT.

At the same time, Gu was defrauded in an online brushing scam and transferred RMB 139,000 to a bank account in the name of Hu, as provided by the fraudster. On the same day, Huang received RMB 137,000 transferred by Gu.

Relationships among the parties: Gu (victim) ➡️ Hu (not brought to justice) ➡️ Huang (defendant)

When Huang was apprehended, public security authorities seized a total of ten bank cards belonging to others at his residence. Although Huang claimed that these bank cards were used to open online stores for others, he failed to provide a reasonable explanation.

The court held that Huang committed the crime of concealing or disguising the proceeds of crime, for which he was sentenced to four years and six months’ fixed-term imprisonment, and the crime of impairing credit card administration, for which he was sentenced to six months’ fixed-term imprisonment; the combined sentence to be executed was four years and nine months’ fixed-term imprisonment.

02 What Is the “Crime of Impairing Credit Card Administration”

Under applicable law, acts such as knowingly possessing or transporting forged credit cards, illegally possessing other persons’ credit cards, and using false identity documents to fraudulently obtain credit cards constitute this offense. For example, the illegal possession of other persons’ credit cards reaches the threshold for criminal investigation when the cumulative number is five or more.

Article 177-1 of the Criminal Law [Crime of Impairing Credit Card Administration] Where any of the following circumstances impairs credit card administration, the offender shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and shall also be fined not less than RMB 10,000 but not more than RMB 100,000, or be fined only; if the quantity is huge or there are other serious circumstances, the offender shall be sentenced to fixed-term imprisonment of not less than three years but not more than ten years, and shall also be fined not less than RMB 20,000 but not more than RMB 200,000:

(1) knowingly possessing or transporting forged credit cards, or knowingly possessing or transporting forged blank credit cards in relatively large quantities;

(2) illegally possessing credit cards issued to others in relatively large quantities;

(3) fraudulently obtaining credit cards by using false identity documents;

(4) selling, purchasing, or providing to others forged credit cards or credit cards fraudulently obtained by using false identity documents.

Article 25 of the Provisions (II) on the Standards for Filing and Prosecuting Criminal Cases under the Jurisdiction of Public Security Organs [Cases of Impairing Credit Card Administration (Paragraph 1 of Article 177-1 of the Criminal Law)] Where credit card administration is impaired and any of the following circumstances is suspected, the case shall be filed for investigation and prosecution:

(1) knowingly possessing or transporting forged credit cards;

(2) knowingly possessing or transporting forged blank credit cards, with a cumulative quantity of ten or more cards;

(3) illegally possessing credit cards issued to others, with a cumulative quantity of five or more cards;

(4) fraudulently obtaining credit cards by using false identity documents;

(5) selling, purchasing, or providing to others forged credit cards or credit cards fraudulently obtained by using false identity documents.

03 Frequently Asked Legal Questions

Q: Using another person’sdebit card or savings cardconstitute this offense?

A: Yes, it does. Although the offense is titled “Crime of Disrupting Credit Card Administration,” debit cards and savings cards also fall within the broad category of credit cards. In practice, there is no controversy over characterizing such conduct involving debit or savings cards as the Crime of Disrupting Credit Card Administration.

In Judgment No. 2289 of the First Instance Criminal Case (2015) Bao Xing Chu Zi, the court addressed the defense counsel’s argument that Hu Jianyang had purchased other people’s bank cards but did not illegally possess them, and that bank cards are not credit cards. The court held that the term “credit card” as prescribed in the Criminal Law includes both debit cards and credit cards in the ordinary sense.

Q: Purchasing bank cardsvoluntarily soldby cardholders, or using bank cardsvoluntarily providedby relatives or friends, constitute this offense?

A: Yes, it does. Case Study 1 in this article involves a university student who voluntarily sold their card to the defendant.

In Judgment No. 1707 of the First Instance Criminal Case (2016) Yue 0304 Xing Chu, the court stated that the object of the Crime of Disrupting Credit Card Administration is the state’s credit card administration system. Article 28 of the Measures for the Administration of Bank Card Business issued by the People’s Bank of China provides that bank cards and their accounts shall be used only by the approved cardholder themselves and may not be leased or lent. Therefore, even if the cardholder in this case consented to the defendant Fu Longjie’s possession of the credit card, such possession must still comply with credit card administration regulations; otherwise, it cannot serve as a basis for legality. The defendant Fu Longjie, for the purpose of profit, possessed and actually used another person’s credit card. His conduct violated credit card administration regulations and disrupted the order of credit card administration, constituting illegal possession of another person’s credit card in a relatively large amount. He should therefore be convicted and punished for the Crime of Disrupting Credit Card Administration.

Q: If a person uses another person’s bank card and receives proceeds of crime, should the offenses be punished cumulatively for multiple crimes, or should only the most serious offense be punished?

A: This depends on whether there is a implicated relationship between the actor’s possession of another person’s bank card and the receipt of proceeds of crime into that bank card.

For example, in Case 2 discussed in this article, the two offenses were punished cumulatively. After receiving funds from others, Huang purchased virtual assets for them. The funds received by Huang were themselves proceeds of crime derived from upstream illegal or criminal activities. Therefore, Huang’s act of purchasing virtual assets was, in substance, disposing of stolen goods on behalf of others, thereby committing the crime of concealing or disguising the proceeds of crime. In addition, the other persons’ bank cards seized at Huang’s residence were unrelated to the aforementioned disposal of stolen goods, and there was no reasonable justification for their possession; thus, Huang also committed the crime of impairing credit card administration.

The key to determining that an actor independently constitutes the crime of impairing credit card administration lies in whether there is evidence proving that, after borrowing another person’s credit card, the actor used it to transfer illicit funds, thereby impeding judicial authorities’ investigation and handling of the upstream crime.

For another example, in the case of Wang Jia and others involving impairment of credit card administration[iii], Wang Jia, Wang Yi, and others established a studio engaged in illegal payment-settlement schemes. They acquired bank card kits (including bank cards, SIM cards, online banking USB tokens, and preset transfer passwords) and provided the collected bank account numbers, account holder names, and other information via work groups on the “Telegram” messaging app to upstream operators, who bound these accounts to specific online platforms for fund transfers.

The court held that defendants Wang Jia and Wang Yi illegally possessed other persons’ bank cards and provided payment and settlement assistance for others to commit cybercrimes. Their conduct constituted the crime of impairing credit card administration, for which they were sentenced to terms ranging from two years and six months to three years and six months.

In this case, the actors purchased bank cards to provide payment and settlement assistance for others to commit cybercrimes, which also implicated the crime of aiding cybercriminal activities. Where an actor, in committing one crime, employs means that simultaneously constitute another offense, this constitutes an implicated offense, and only the more serious offense should be punished. The maximum statutory penalty for the crime of aiding cybercriminal activities is imprisonment of up to three years, whereas the maximum statutory penalty for the crime of impairing credit card administration is imprisonment of up to ten years. Accordingly, the actors were convicted of the crime of impairing credit card administration.

04 Attorney Shao’s Reminder

Compared with the crime of impairing credit card administration (which carries a maximum sentence of up to ten years’ imprisonment), having bank cards frozen due to buying or selling virtual assets, or being convicted of the crime of aiding cybercriminal activities (maximum three years’ imprisonment) or the crime of concealing or disguising the proceeds of crime (maximum seven years’ imprisonment), generally results in a less severe characterization.

Friends who have needs to cash out in their daily lives should, while conducting strict KYC reviews of counterparties, also bear in mind not to use other persons’ bank cards to receive payments, so as to avoid triggering the offenses discussed in this article.