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Chinese prosecutors say five men tricked a USDT seller in Xuzhou on March 23, 2026, by showing him 1.2 million yuan in cash, then dropping the bag from a second-floor window to accomplices while he checked a transfer that had already gone through.
Prosecutors in Pei County, Jiangsu province, disclosed the case on October 29, 2026, after reclassifying it from snatch to fraud. No verdict has been announced.
According to prosecutors in Pei County, the alleged scheme began when a man surnamed Wang arranged to purchase USDT from a seller identified as Xiao.
The two individuals had previously completed two cash-based cryptocurrency transactions without incident, establishing a level of trust that investigators believe became central to the subsequent deception.
After learning that cryptocurrency trading was prohibited in China, Wang allegedly devised a plan to obtain the seller’s digital assets without paying for them.
He reportedly recruited four accomplices, including individuals identified by the surnames Xu and Zhang, to participate in the operation.
Investigators said the group inspected the intended meeting location in advance, including the shop’s layout and staircase, before assigning responsibilities to individual participants.
On March 23, the suspects arranged another transaction involving 1.2 million yuan in cash in exchange for an equivalent value of USDT.
The meeting took place on the second floor of a commercial building in Xuzhou, Jiangsu province.
Xu allegedly arrived with the agreed amount in banknotes, allowing Xiao to inspect and count the cash before completing the cryptocurrency transfer.
Satisfied that the payment was available, Xiao transferred the corresponding USDT to a wallet address designated by Wang.
However, prosecutors allege that the apparent transaction was designed to deceive the seller from the beginning.
The Yuan USDT Bait Case centered on the suspects’ alleged use of genuine cash to create the appearance of a legitimate purchase while maintaining control over the money throughout the operation.
Following the cryptocurrency transfer, Xu reportedly contacted Wang to confirm whether the digital assets had arrived in the designated wallet.
Wang allegedly claimed that the USDT had not been received, prompting Xiao to investigate the transfer records.
According to the prosecution’s account, that moment provided the opportunity for the suspects to execute the next stage of their plan.
While Xiao checked the blockchain transaction details, Xu allegedly carried the bag containing 1.2 million yuan to a nearby window.
He then dropped the cash from the second floor to accomplices waiting outside the building.
The individuals below reportedly collected the bag, entered a vehicle, and fled the location.
When Xiao attempted to pursue them, Zhang and other participants who had allegedly concealed themselves in an adjacent room emerged and obstructed his path.
Unable to recover the money or stop the departing suspects, Xiao contacted the police.
Investigators subsequently examined the transaction and the circumstances surrounding the disappearance of the cash.
The alleged deception involved two separate elements: the transfer of USDT to an address controlled by the buyer and the removal of cash that had been presented as payment.
Although the bag of money was physically moved from the building, prosecutors later determined that it had never passed into the seller’s possession.
This distinction became central to the legal interpretation of the Yuan USDT Bait Case, ultimately influencing the charges brought against the five defendants.
Police initially referred the investigation to the Pei County procuratorate in June on suspicion of snatch, an offense involving the open taking of another person’s property.
However, prosecutors reconsidered that classification after reviewing additional evidence.
The investigative process included examination of vehicle dashboard camera recordings, surveillance footage from the commercial premises, and forensic analysis of mobile phones belonging to the suspects.
Authorities also conducted supplementary interrogations to establish how the alleged operation had been organized.
Based on the evidence, prosecutors concluded that the cash presented during the transaction had remained under the suspects’ control throughout the incident.
The money was therefore considered an instrument of deception rather than property unlawfully taken from the seller.
Instead, investigators identified the transferred USDT as the asset that Xiao had allegedly lost.
The prosecution consequently changed the criminal allegation from snatch to fraud, arguing that the suspects had deliberately induced the victim to surrender cryptocurrency through a staged payment arrangement.
The Yuan USDT Bait Case subsequently raised another legal dispute when defense lawyers challenged the fraud classification.
During court proceedings, the defense argued that the alleged conduct should be treated as contract fraud, an offense concerning deception in the formation or performance of contractual agreements.
That interpretation could affect the sentencing framework applicable to the defendants.
However, prosecutors rejected the argument, maintaining that contract fraud provisions are intended to protect legitimate market activities.
They cited a September 2021 notice issued by the People’s Bank of China and other government departments, which classified virtual currency-related business activities as illegal financial operations.
Prosecutors argued that a prohibited cryptocurrency transaction could not be treated as an ordinary commercial agreement for the purposes of the contract fraud provisions.
The distinction formed a major part of the legal arguments presented during the hearing.
The proceedings have highlighted the legal complexity of cryptocurrency transactions in a jurisdiction where related financial business activities are prohibited.
Although the underlying USDT trade was not legally permitted, prosecutors maintained that the alleged deception involving the digital assets could still support criminal fraud charges.
The prosecution’s position effectively distinguished the illegality of the transaction from the alleged unlawful acquisition of property.
According to the case account, the hearing lasted more than three hours and was attended by a review panel from China’s Supreme People’s Procuratorate.
Investigators also reported inconsistencies among the defendants’ statements.
Of the five accused individuals, Zhang was reportedly the only defendant who maintained a consistent account, while Wang and the other suspects revised their explanations during the proceedings.
The court has completed the hearing but has not announced a date for delivering its judgment.
The outcome of the Yuan USDT Bait Case could provide further insight into how Chinese courts distinguish ordinary fraud from contract-related offenses when digital assets are involved.
It may also clarify how criminal liability is assessed when an alleged financial deception occurs within a prohibited trading activity.
For cryptocurrency users, the case illustrates the risks associated with informal over-the-counter transactions, particularly where buyers and sellers rely on physical cash settlements and independently controlled digital wallets.
Although blockchain transfers can establish when digital assets move between addresses, disputes concerning payment arrangements and ownership can complicate the recovery of lost funds.
The alleged scheme demonstrates how a seemingly routine cryptocurrency sale can become a criminal investigation when one party uses prior business relationships and staged payment arrangements to gain another person’s trust.
As Chinese authorities continue enforcing restrictions on virtual currency-related business activities, the pending decision in the Yuan USDT Bait Case will determine the legal consequences for the five defendants.
Until the court delivers its ruling, the allegations remain unproven, and the accused individuals retain the presumption of innocence.
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