Written by: Xiao Za Legal Team
As a key link connecting fiat currency and virtual assets, cryptocurrency OTC trading is frequently exploited by telecom network fraud, online gambling, and other illegal activities due to its characteristics of anonymity and cross-border nature, becoming an important channel for fund circulation and money laundering. Both individual traders and practitioners from related institutions face extremely high criminal legal risks. The Xiao Za team will systematically analyze the legal boundaries of cryptocurrency OTC trading from various dimensions, including the applicability of criminal charges, subjective "knowledge" determination, threshold standards, and judicial practice considerations, providing risk avoidance guidance for practitioners.
Participating in cryptocurrency OTC trading, if one knows or should know that the transaction funds originate from telecom network fraud, online gambling, or other criminal activities, and still provides assistance in payment settlement, fund transfer, etc., it may trigger multiple criminal charges, including aiding information network crime, concealing and disguising criminal proceeds, money laundering, and may even be identified as an accomplice to fraud or operating a casino. The specific definition of charges must be judged comprehensively based on multiple factors, including the subjective awareness of the actor, the degree of participation, the nature of the upstream crime, and the amount involved. It is worth noting that in judicial practice, the determination of "knowledge" does not rely on the actor's self-admission but is inferred through objective evidence such as transaction prices, transaction methods, transaction frequency, account anomalies, and the actor's professional background. Once the payment settlement amount, illegal income amount, and other standards specified in judicial interpretations are met, it will be recognized as "serious circumstances," facing harsher penalties. Therefore, establishing a strict customer identity verification and fund source review mechanism has become a must-answer question for OTC participants.
I. Distinction Between Aiding Crime and Accomplice to Upstream Crimes
Providing payment settlement assistance to upstream crimes is the primary behavioral pattern involving criminality in cryptocurrency OTC trading, and the core of criminal liability determination lies in distinguishing whether it constitutes an independent aiding information network crime (hereinafter referred to as "aiding crime") or whether it forms a joint crime with the upstream criminal actor.
The core characteristic of constituting an independent aiding crime is providing "one-to-many" payment settlement assistance for unspecified network criminal activities, where there is usually no prior conspiracy or stable cooperative relationship between the actor and the upstream criminal. According to Article 287 of the Criminal Law of the People's Republic of China (2023 Revision), knowing that others are using information networks to commit crimes and providing payment settlement assistance, if the circumstances are serious, constitutes aiding crime. Article 12 of the Interpretation by the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases of Illegal Use of Information Networks and Aiding Information Network Crimes clearly states that payment settlement amounts of over 200,000 yuan, providing funds of over 50,000 yuan through advertising, or illegal income of over 10,000 yuan should be recognized as "serious circumstances." Additionally, the Opinions on Handling Criminal Cases Related to Telecom Network Fraud and Other Issues (II) include the acquisition, sale, or rental of internet account passwords, payment interfaces, etc., with payment settlement functions into the category of "aiding," directly covering the behavior of OTC merchants circulating funds through virtual currency trading platform accounts.
In judicial practice, such cases are not uncommon: in case (2024) Ji 0803 Criminal First Instance No. 1, defendant Wu used multiple Alipay accounts to provide payment settlement assistance for a gambling platform, involving an amount of 3.78 million yuan, and was convicted of aiding crime; in case (2025) Ji 0303 Criminal First Instance No. 67, defendant Fu organized others to transfer funds to a gambling website using bank cards, involving over 6.09 million yuan, and was also convicted of aiding crime. It is worth noting that even if one does not directly operate the transfer, introducing or facilitating others to provide payment settlement tools may also involve crime. In case (2024) Xin 4002 Criminal First Instance No. 30, Min knowingly introduced a bank card to Zhao, who was engaged in online gambling, and was ultimately recognized as an accomplice to aiding crime.
If there is prior conspiracy or a stable cooperative relationship between the actor and the upstream criminal, it may be recognized as an accomplice to the upstream crime. According to the Opinions from the Supreme People's Court, the Supreme People's Procuratorate, and the Ministry of Public Security on Several Issues Concerning the Application of Law in Handling Network Gambling Criminal Cases, knowing that others are committing fraud or gambling crimes and providing assistance in cost settlement will be treated as accomplices to fraud or gambling crimes; providing funding payment settlement services to gambling websites, charging service fees of over 10,000 yuan or helping to collect gambling funds of over 200,000 yuan constitutes an accomplice to operating a casino. In a case tried by the Intermediate People's Court of Handan City, Hebei Province in 2025, a gaming platform set up a gambling module using virtual assets "Ling Stone" as chips, and players privately bought and sold "Ling Stone" through channels like a certain messaging app, resulting in an OTC trading chain involving over 557 million yuan. Xu, who had previously been sentenced for operating a casino, knowingly promoted the platform's gambling while acting as a first-level agent, developing lower-level players through social media, and profiting from buying and selling "Ling Stone" via a certain app, ultimately being recognized as an accomplice to operating a casino. Cases such as (2024) Min 0721 Criminal First Instance No. 4 and (2024) Ji 0284 Criminal First Instance No. 97 also clearly state that providing specialized and continuous fund circulation services for online gambling is easily recognized as an accomplice to operating a casino. Furthermore, the Opinions on Handling Criminal Cases Related to Aiding Information Network Crimes further state that if one organizes personnel to provide bank accounts, payment accounts, etc., for others to commit fraud using information networks, with prior conspiracy or a stable cooperative relationship, they will be punished as accomplices to the upstream crime. In a typical case, defendant Fu conspired with a fraud gang to organize the acquisition of accounts and transfer fraud funds, being recognized as an accomplice to fraud, with a sentence far exceeding that of aiding crime, which serves as a strong warning to OTC merchants.
II. Determination of Subjective "Knowledge"
"Knowledge" is a core subjective element constituting aiding crime, concealing crime, money laundering, and other charges. In judicial practice, the "rebuttable presumption" principle is adopted, meaning that subjective awareness is inferred from objective behavior, while allowing the actor to present counter-evidence.
Relevant judicial interpretations and meeting minutes clarify the presumption situations of "knowledge." The Interpretation on Handling Criminal Cases of Illegal Use of Information Networks and Aiding Information Network Crimes lists situations where actions are taken after being informed by regulatory authorities, transaction prices or methods are obviously abnormal, providing specialized technical support for illegal activities, frequently using concealed internet measures to evade supervision, etc.; the Opinions on Handling Criminal Cases Related to Telecom Network Fraud (II) require a comprehensive determination based on transaction frequency, the actor's cognitive ability, past experiences, profit situations, and other subjective and objective factors. Industry practitioners in telecommunications, banking, etc., who illegally open or sell accounts using their positions can be directly presumed to have "knowledge"; the meeting minutes related to the "cutting off cards" action further supplement characteristics such as batch card applications across provinces or by multiple people, continuing transactions after receiving fraud risk notifications, continuing to use accounts after freezing, frequently using encrypted communication, and preparing responses to investigations in advance.
These presumption situations are extremely common in OTC trading, such as using encrypted communication tools like Telegram, frequently changing trading accounts, and transaction prices deviating from market prices, all of which may become strong evidence for judicial authorities to infer "knowledge." In judicial practice, the determination of "knowledge" does not rely on the defendant's confession; even if the actor refuses to admit it, if there are anomalies in transaction time and location, or suspicious fund transfer paths, subjective awareness can still be inferred through the evidence of the entire case, with increasingly strict review standards.
Despite the strict presumption rules, actors still have room for defense, with "good faith acquisition" being an important direction for defense. According to the judicial interpretation's provision of "unless there is contrary evidence," if the actor can prove that they were indeed unaware and had exercised reasonable diligence, they may not constitute a crime. In practice, OTC merchants, if they only post orders on a single platform, select sellers with longer registration times, actively inquire about the source and purpose of funds, and require buyers to provide bank statements, identity information (including video recordings), and consistency verification of remittance information, can be recognized as having fulfilled reasonable review obligations, constituting good faith acquisition. This also means that establishing a sound customer identity verification (KYC), fund source review, and transaction record retention mechanism is key to preventing criminal risks. Additionally, confessions and electronic evidence are crucial for determining subjective states; the content of confessions during interrogations, communication records during transactions, compliance review records, etc., may all become core evidence to prove whether the actor subjectively had "knowledge."
III. Application of Concealment Crime and Money Laundering Crime
When the illicit funds involved in OTC trading originate from specific serious crimes, the actor may not only constitute aiding crime or an accomplice to upstream crimes but may also violate the crime of concealing and disguising criminal proceeds (hereinafter referred to as "concealment crime") or money laundering crime, both of which have a more targeted approach to combating money laundering activities.
The application scope of concealment crime is relatively broad. According to Article 312 of the Criminal Law of the People's Republic of China (2023 Revision), knowing that it is criminal proceeds and their generated income and harboring, transferring, acquiring, selling on behalf of, or using other methods to conceal or disguise it constitutes this crime, where "other methods" include providing fund accounts and transferring funds through payment settlement methods. The Interpretation on Handling Criminal Cases Related to Concealing and Disguising Criminal Proceeds and Their Income clearly states that if the amount concealed or disguised reaches over 100,000 yuan, it constitutes "serious circumstances," punishable by imprisonment of three to seven years. In case (2025) Wan 0111 Criminal First Instance No. 111, defendants Cheng and Wang transferred criminal proceeds by purchasing virtual currency, with amounts reaching over 810,000 yuan and 670,000 yuan respectively, both recognized as concealment crime with "serious circumstances"; in multiple cases such as (2024) Jin 0724 Criminal First Instance No. 109 and (2024) Jing 0102 Criminal First Instance No. 562, defendants assisted in transferring fraud funds by providing bank cards and purchasing virtual currency, all convicted of concealment crime, indicating that this crime is a common charge in judicial practice for combating the transfer and realization of fraud proceeds.
The upstream crimes for money laundering are limited to drug crimes, organized crime, terrorist activities, smuggling crimes, corruption and bribery crimes, crimes disrupting financial management order, and financial fraud crimes. Article 191 of the Criminal Law of the People's Republic of China (2023 Revision) clearly states that transferring or converting the proceeds and income of the above seven types of crimes through virtual asset transactions can be recognized as "using other methods to conceal or disguise the source and nature of criminal proceeds and their income," providing direct legal basis for the application of this crime. Practical analysis indicates that the presumption logic established by the new money laundering judicial interpretation can be extended to concealment crime, with increasingly unified and strict review standards for OTC merchants. For example, continuing transactions after a bank card is frozen can serve as important evidence for presuming "should know." Once transactions involve funds from the above seven types of crimes, behaviors of transferring through virtual currency may simultaneously violate both money laundering crime and illegal business operation crime, constituting imagined competition, with one serious crime being punished. Since the threshold for serious circumstances in money laundering crime (imprisonment of five to ten years) may be lower than that for "particularly serious circumstances" in illegal business operation crime (imprisonment of five years or more), money laundering crime may become a more severe path for accountability.
IV. Industry Regulation and Administrative Penalties
Cryptocurrency OTC trading not only faces risks of criminal accountability but also needs to respond to clear industry regulatory prohibitions and administrative penalties, forming a "criminal + administrative" dual regulatory framework. From the perspective of industry self-discipline, the "Announcement by the China Payment and Clearing Association on Key Reporting Matters for Illegal Payment and Settlement Activities in 2025" and the "Announcement on Key Reporting Matters for Illegal Payment and Settlement Activities in 2024 (First Issue)" both list "providing payment services for illegal transactions such as telecom network fraud and cross-border gambling" as key reporting matters, clearly delineating industry red lines. From the perspective of national law, Article 25 of the "Anti-Telecom Network Fraud Law of the People's Republic of China" explicitly prohibits any unit or individual from providing support or assistance for others to engage in telecom network fraud activities through virtual currency trading and money laundering, requiring internet service providers to monitor, identify, and handle payment settlement businesses. More critically, the "Notice from the People's Bank of China and Other Departments on Further Preventing and Addressing Risks of Speculation in Virtual Currency Trading" directly denies the legality of activities related to virtual currency, clearly stating that all activities such as conducting exchange services between fiat currency and virtual currency are strictly prohibited and will be banned according to law, with criminal liability pursued for those constituting a crime, providing policy support for administrative regulation and criminal accountability.
Conclusion
The core of legal risk prevention and control in cryptocurrency OTC trading lies in maintaining the two bottom lines of "subjective unawareness" and "compliance review." For OTC merchants and related practitioners, it is necessary to establish and improve compliance mechanisms for customer identity verification, fund source review, and transaction record retention, actively avoiding high-risk behaviors such as abnormal transaction prices, frequently changing accounts, and using encrypted communications to evade regulation, while closely monitoring developments in judicial practice and regulatory policies. Only by clarifying legal boundaries and adhering to compliance bottom lines can one effectively prevent criminal and administrative risks and avoid being drawn into illegal crime chains.
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