Attorney Shao Shiwei | Why Does Buying and Selling Virtual SIM Cards Constitute a Crime?

The issue does not lie in the buying and selling of virtual numbers per se, but rather in how you used them.

In fact, virtual numbers themselves are not illegal. The key lies in the purpose and use for which they are purchased, sold, and employed. For example, it is lawful for enterprises to purchase virtually numbered services that have undergone compliant real-name verification for customer service or marketing promotions, provided they strictly adhere to real-name registration requirements and telecommunications management regulations.

So why do some individuals face criminal risks due to the buying and selling of virtual numbers?

In practice, many cases do not arise from the act of “purchasing numbers” itself, but because these numbers were used in specific scenarios, such as:

• Frequently registering accounts, thereby triggering platform risk-control mechanisms;

• Conducting batch operations from the same device or IP address;

• Abnormal correlations between accounts and fund flows;

Once platforms or investigative authorities obtain information regarding these details, they become important bases for subsequently determining the nature of the conduct.

Risks emerge gradually.

In fact, the magnitude and even the existence of risk are stratified. From low risk to high risk, the stages can be broadly categorized as follows:

1. Limited use for personal registration

The most common scenario involves purchasing a small number of virtual phone numbers to register accounts, claim discounts, or participate in promotional activities.

In such cases, if the quantity is small and the purpose is singular, the conduct typically remains at the level of administrative illegality, potentially resulting in penalties such as fines and confiscation of illegal gains.

Many individuals, due to a lack of risk awareness at this stage, form misjudgments and proceed to the second step.

2. Batch operations, turning into arbitrage tools

When the conduct evolves into “batch operations,” its nature changes.

For example: repeatedly registering accounts using virtual phone numbers to obtain platform discounts; exploiting loopholes in rules to accumulate points and benefits, and then providing payment-on-behalf or arbitrage services to third parties;

In such cases, the key issue is often not merely “whether profits were made,” but rather:

• Whether there is conduct involving repeated registrations and recurrent profit-making;

• Whether benefits that should not have been enjoyed were obtained through false identities;

• Whether a stable arbitrage pattern has been formed.

Once these factors are established, the nature of the conduct may be recharacterized from merely taking petty advantage to conduct deemed to be carried out with the intent of illegal possession.

In practice, there have been cases in which similar conduct was directly treated as fraud. For example, Shanghai courts have handled several cases in which individuals used virtual phone numbers to register accounts in bulk, repeatedly obtained platform benefits such as "new-user discounts" and "parking fee reductions," and then provided third-party payment services to earn the price difference, with the conduct characterized as fraud.

3. Involvement in Gray-Market Chains (Code Reception and Account Circulation)

A further escalation of risk occurs when, after purchasing virtual phone numbers, an individual provides "code reception services" to others. Once connectivity with others is established, the risks are no longer solely within your control.

If downstream parties use the received verification codes for telecom fraud, those who provide code reception services may be deemed to have provided critical assistance within the chain, even if they did not directly participate in the fraud.

In such cases, the most contentious issue is often "whether the person had knowledge." In practice, however, "knowledge" does not necessarily require direct evidence; it is frequently inferred from objective circumstances, such as:

• Clearly abnormal usage scenarios (frequent code reception, anomalous account registrations);

• Returns that are clearly disproportionate to costs;

• Long-term, continuous participation in similar conduct;

Once these circumstances are established, even if the actor subjectively believed they were "merely helping," their conduct may be evaluated as constituting "should have known." For example, in a case involving code reception, the actor acquired and controlled a large number of virtual phone numbers, provided verification code reception services to others, and settled fees on a per-transaction basis.

On its face, such conduct appears to be merely "receiving SMS messages on behalf of others" and does not directly involve fraud. However, subsequent investigations revealed that the accounts registered through code reception were used to build fraud-related systems, conduct traffic diversion, and engage in customer-service communications, ultimately causing substantial losses to victims.

In such circumstances, judicial authorities do not evaluate the act of "code reception" in isolation, but examine it within the entire chain: whether the actor provided services on a long-term and repeated basis; whether the actor derived stable profits therefrom; and whether the actor had basic awareness of the abnormal uses.

Once these factors are established, even if there was no direct participation in the execution of the fraud, the conduct may be characterized as providing assistance at a critical stage, thereby giving rise to corresponding liability.

4. Direct use in carrying out deceptive acts

Another category involves the direct use of virtual numbers to carry out deceptive acts. Unlike the scenarios described above, the conduct at this stage is aimed directly at obtaining benefits through deception.

For example, in a case involving fare evasion on a ride-hailing platform, an individual registered accounts by purchasing virtual numbers in bulk and attracted users under the guise of "low-cost proxy ride-hailing." In practice, the individual first collected fares from passengers, then used virtual numbers to repeatedly switch accounts and place orders without paying the actual fares incurred to the platform, which was determined to constitute fraud.

High-risk areas for individuals who create or sell accounts

Compared with buyers, sellers' risks tend to center on one core issue: the source of the information underlying these numbers.

If the conduct involves the bulk collection of other persons' real-name information, or the acquisition of identity data through part-time work, user-referral incentives, or similar means, and such data is then used to register virtual numbers for resale, it crosses the red line of infringing citizens' personal information.

In some cases, such conduct forms a chain with clearly defined divisions of labor:

Some individuals are responsible for collecting information, others for registering numbers, and still others for bulk sales or liaising with downstream parties. Once integrated into such a hierarchical system, an individual's actions are no longer viewed in isolation but are assessed as part of the overall scheme.

For example, in cases involving "staffing-for-presence" studios or "account-broker intermediaries," the actors did not merely use the information; instead, they employed organized methods to obtain other persons' real-name data in bulk, used it to register accounts or virtual numbers, and further packaged and sold the data or connected with downstream parties for profit. If such conduct is characterized as "collecting, processing, and providing citizens' personal information in bulk for the purpose of profit," the actor may be deemed to have played a central role in the offense of infringing citizens' personal information, and thus face criminal liability, even if the actor did not directly carry out the subsequent unlawful acts.

Does the buying and selling of virtual SIM cards constitute a crime?

At this point, it becomes clear that the mere buying and selling of virtual numbers does not automatically amount to a crime. The assessment must first consider whether one's own conduct: (i) forms part of a complete chain of actions; (ii) is characterized as undertaken with "knowledge"; and (iii) has resulted in actual harmful consequences.

The same conduct may lead to entirely different conclusions under different charges and chains of evidence. For the same conduct, some individuals may be subject to administrative penalties, while others may face criminal liability.

At the same time, it is necessary to consider how one’s own conduct will be characterized in terms of role within the entire chain.

Is the individual an ordinary user, a participant in arbitrage activities, or already part of a link in the black-and-grey industry chain?

Did the individual play a primary role, assume an auxiliary or assisting role, or remain completely unaware of and uninvolved in criminal activities such as fraud committed by others?

These determinations often directly dictate the subsequent outcome of the case.

It should be noted that, in such cases, not all conduct will be directly deemed criminal. In each specific case, it remains necessary to examine whether the actor actually participated in key links, whether the conduct was continuous and organized, and whether there was genuine awareness of the downstream uses, among other factors.

Concluding Remarks

If one merely purchases virtual phone numbers from others and limits their use to everyday purposes, the issue may not yet be serious.

However, if circumstances have already arisen—such as account suspension or usage restrictions imposed by platforms, requests by police to explain account or fund sources, questioning, the taking of written statements, or even the imposition of coercive measures—

then the issue is often no longer one of “whether the conduct is unlawful,” but rather how the matter should be characterized in criminal proceedings.

What is critical is your position within the entire chain and how the evidence will be interpreted. These two factors often directly determine the subsequent trajectory of the case.

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