Overseas Not Outside the Law: China Prosecutes Cross-Border Crypto Scams

The Guangdong Court in China has concluded a high-profile cross-border fraud case involving a virtual currency "rug pull" scam, sentencing perpetrators to prison terms and fines after they defrauded a foreign victim of approximately $462. The case, which unfolded in Lechang City, Shaoguan, highlights the Chinese government's intensified focus on regulating digital assets and cracking down on financial crimes, according to a Weex report.

According to court documents, the defendants—including Zhang Mosong—used mobile devices and computers to bypass internet restrictions, posing as financial bloggers on social media platforms to gain victims' trust. Once trust was established, the group directed victims to invest in virtual currency on a fraudulent platform, ultimately siphoning their funds. The scam targeted a foreign individual who lost 4,619.9 RMB (approximately $462) before the scheme was uncovered. The court emphasized that the perpetrators' claim of "only defrauding foreigners" does not constitute a legal defense, underscoring that "overseas is not outside the law." The detailed account above appears in the Weex report.

Sentences ranged from six to eight months of imprisonment, with additional fines imposed on the convicted individuals. The court's decision aligns with broader national efforts to curb digital asset-related crimes, particularly those involving cross-border financial fraud. In a related development, Chinese authorities have pursued over 50 similar cases since 2024, seizing billions of RMB in assets linked to virtual currency activities deemed illegal under current regulations, according to a Yahoo Finance article. The Supreme People's Procuratorate has repeatedly warned that "virtual currency offshore exchange activities" fall under prohibited financial operations, subjecting participants to both civil and criminal penalties, as detailed in the same Yahoo Finance coverage.

The Lechang Court's ruling also serves as a cautionary reminder to the public about the risks of unregulated virtual currency investments. A ChainCatcher article reiterated the court's message, advising readers to approach digital assets with caution and avoid speculative practices. The case underscores the growing scrutiny of virtual currency platforms and the legal consequences for exploiting them in fraudulent schemes.

This verdict follows a string of high-profile legal actions against cryptocurrency-related crimes in China. Earlier this year, a separate case saw five individuals jailed for moving USDT (Tether), a stablecoin often used for cross-border transactions, highlighting the government's zero-tolerance approach to perceived threats to financial stability, as previously reported by Yahoo Finance. Meanwhile, international regulators are also stepping up efforts to combat crypto fraud, as seen in the arrest of a UK-linked figure allegedly involved in a $31M exit scam, reported by a CryptoNews article.

The Guangdong case reflects a global trend of judicial systems adapting to the challenges posed by decentralized finance. As virtual currency scams evolve in complexity, courts are increasingly prioritizing cross-border cooperation and legal clarity to address gaps in enforcement. The Lechang Court's decision reinforces the principle that jurisdictional boundaries do not shield criminal activity, particularly when it involves digital assets that transcend traditional regulatory frameworks.