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A Chinese court has sentenced five operators of the Sifang payment network to three to six years in prison for laundering $428 million in gambling proceeds through USDT, bank cards and third-party payment accounts.
The case centers on a payment operation that handled more than 2.95 billion yuan, equivalent to about $428 million, between May 2022 and October 2023. According to court records cited by The Paper, the network moved money through USDT, bank cards and accounts belonging to third-party payment companies.
The latest ruling involved Ma, whose conviction for illegal business operations was upheld by the Intermediate People’s Court of Xilin Gol League in Inner Mongolia on June 26. His four-and-a-half-year sentence and 3 million yuan fine remained intact, while the court ordered the recovery of 2.95 million yuan in recognized illegal proceeds.
The case is the final judgment in a wider group of prosecutions involving the Sifang operation.
The crackdown underscores the legal risks surrounding unlicensed payment settlement in China, particularly when such infrastructure is allegedly used to facilitate overseas gambling activity.
The Sifang operators were not accused simply of holding or trading cryptocurrency. Rather, prosecutors focused on their alleged role in providing payment channels and settlement services to gambling businesses.
Court records showed that five defendants processed payments through 105 merchant accounts connected to 10 third-party payment companies.
According to The Paper, Zhu, Zhang, Tang, Du and Ma began developing the operation in May 2022 after identifying potentially lucrative demand for payment services from gambling platforms.
The group allegedly commissioned 32 collection and payment platforms, rented servers outside China and established contacts with operators of overseas gambling websites. The infrastructure allowed gambling businesses to connect with merchant accounts maintained at established third-party payment providers.
That arrangement is significant because Sifang, or fourth-party payment services, sit between merchants and existing payment providers. Instead of being a licensed payment institution, such platforms can aggregate payment interfaces and channels from multiple providers.
Investigators said Zhu and Zhang played central management roles, including coordinating payment routes, communicating with third-party providers, resolving transaction complaints and distributing profits.
Ma was found to have introduced payment channels and intermediaries, supplied registration materials and assisted merchants with opening accounts at third-party payment companies.
The Sifang operators allegedly earned money by charging commissions on transfers connected to overseas gambling websites. Prosecutors initially estimated that the group generated 42.85 million yuan from a 1.45% commission, although the courts ultimately attributed smaller amounts of illegal proceeds to individual defendants.
Zhu received five years in prison and an 800,000 yuan fine. Zhang was sentenced to six years and fined 850,000 yuan. The other defendants received prison terms between three and six years, according to The Paper.
The investigation also shows how blockchain transaction records can become part of a criminal prosecution even when the underlying activity involves conventional bank accounts.
Judicial records cited by The Paper showed that a wallet linked to Zhang received 4.146 million USDT through 485 deposits between July 2022 and October 2023. The court valued those transactions at approximately 26.95 million yuan.
The same wallet reportedly sent 4.097 million USDT through 497 transfers. Zhu, Zhang and Du also converted 1.905 million USDT into cash through 11 offline transactions, which the court valued at about 12.38 million yuan.
Ma’s transactions were also examined through records obtained from OKX. Court documents said 152 transfers totaling 719,176.7 USDT were sent to a wallet he provided. Those tokens were valued at roughly 4.67 million yuan.
After accounting for 1.72 million yuan returned by a co-defendant, the court recognized 2.95 million yuan as Ma’s illegal proceeds.
The Sifang operators’ case therefore illustrates a key feature of blockchain investigations: while wallet addresses do not automatically reveal a person’s identity, transaction histories can create a detailed record of money movement that investigators may combine with exchange records, account information and other evidence.
Investigators in Erenhot reportedly obtained wallet addresses from Tether and transaction information from OKX during the investigation.
The prosecution also raises a broader question for Chinese courts: how should blockchain evidence be linked to specific individuals when crypto transactions cross jurisdictions and pass through multiple wallets?
Wang Xiaohua, an associate professor at East China University of Political Science and Law, told The Paper that connecting traceable blockchain transactions to specific people can remain difficult when digital assets do not pass through an exchange that maintains identifying information.
That issue was central to Ma’s defense. His lawyer argued that investigators had not adequately established the number of payment accounts he controlled or explained the purpose of more than 100 USDT transfers.
The Paper said it sought a response from the Xilin Gol court concerning the evidence, valuation and cross-border collection of transaction data but did not receive a response before publication.
The case arrives amid wider debate in China over the legal treatment of cryptocurrency-related financial crime. Chinese legal scholars and prosecutors have called for clearer approaches to criminal liability, evidence gathering and asset recovery in cases involving digital assets.
A July 13 article in the People’s Procuratorate Daily, cited in the original report, identified those three areas as continuing challenges under China’s current framework.
Prosecutors from Xiangtan’s Yuhu District and a law professor at Xiangtan University have similarly argued that cryptocurrency’s cross-border, decentralized and pseudonymous characteristics can complicate investigations. They also pointed to potential tensions between China’s revised Anti-Money Laundering Law and Article 191 of the Criminal Law.
The Sifang operators’ convictions consequently extend beyond a single gambling case. They highlight Beijing’s continuing willingness to pursue payment infrastructure that authorities believe enables illegal gambling and other financial crimes, while also exposing the evidentiary challenges created by blockchain-based transactions.
China’s Supreme People’s Procuratorate said in June that prosecutors had pursued more than 1,200 people for drug-related money laundering between January 2025 and May 2026. In one case, authorities said drug trafficker Li Mobo laundered more than $7 million through cryptocurrency, although officials clarified that his death sentence covered multiple drug-trafficking convictions and was not imposed solely for money laundering.
For crypto businesses operating anywhere near high-risk payment flows, the message from the case is stark: blockchain transactions may be pseudonymous, but they are not necessarily invisible—and payment infrastructure can become the focus of criminal liability when authorities determine it was used to support prohibited activity.
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