Core Viewpoint - The article highlights the illegal currency exchange activities facilitated by virtual currencies, particularly stablecoins like Tether (USDT), which have become a core tool for cross-border illicit transactions in China, with significant amounts involved in these operations [1][4][9]. Group 1: Case Overview - A recent case revealed that individuals used shell companies to provide stablecoins for clients, enabling cross-border transfers, with illegal foreign exchange transactions amounting to 6.5 billion yuan over three years [1]. - Similar cases have emerged, showing that individuals are turning to illegal exchange channels due to strict regulations on foreign currency transfers in China, with some clients paying high fees for these services [2][4]. - The operations often involve a "matching" mechanism where domestic clients pay in yuan, and the overseas group transfers foreign currency to the clients' accounts, effectively splitting the transaction to evade regulatory scrutiny [3][4]. Group 2: Financial Implications - Criminal groups typically charge clients high fees ranging from 1% to 3%, significantly higher than traditional banking channels, making these illegal services attractive despite the risks [6]. - For instance, a case involving a $500,000 exchange could yield profits of approximately 36,000 to 108,000 yuan for the criminal group through fees alone [6]. - The illegal exchange operations have developed a multi-layered profit model, including transaction fees, price differences in virtual currency trades, and arbitrage strategies [6]. Group 3: Market Dynamics - The use of stablecoins like USDT has become prevalent in illegal currency exchanges, with transaction amounts often exceeding hundreds of millions, indicating a growing trend in illicit financial activities [4][8]. - A specific case illustrated the profit potential, where a trader engaged in USDT transactions could earn significant margins due to price fluctuations, leading to a total transaction volume of 14 billion yuan [8]. - The involvement of virtual currencies in these operations has made it easier to obscure the flow of funds, complicating regulatory oversight and enforcement [7][8].

Core Insights - The rise of stablecoins and decentralization concepts in the capital market has led to their misuse by criminals for illegal cross-border currency exchange, with Tether (USDT) becoming a central tool for these activities [1][2] - Recent cases reveal that the amounts involved in these illegal exchanges often exceed hundreds of millions, with some transactions reaching over 10 billion [1][2] Group 1: Mechanism of Illegal Currency Exchange - The operation of illegal currency exchange involves domestic clients transferring RMB to designated accounts while foreign groups simultaneously transfer foreign currency to the clients' overseas accounts, effectively splitting the transaction to evade regulation [3][4] - Criminal organizations have established a professional division of labor, with individuals managing shell companies and handling significant daily transaction volumes, facilitating efficient operations of illegal exchange networks [4] Group 2: Profit Models and Incentives - The core profit channels for these illegal exchange operations include transaction fees, profit from price differences in virtual currency trades, and a dual arbitrage strategy of buying low and selling high [1][6] - For instance, a case from Chongqing highlighted that a trader could earn approximately 0.15 RMB per USDT through price discrepancies, leading to substantial profits as transaction volumes increased [6][7] Group 3: Legal and Regulatory Implications - The involvement of virtual currencies in illegal exchanges poses significant risks, as these transactions operate outside regulatory frameworks, making it difficult for participants to seek legal recourse in case of disputes or fraud [7] - The activities contribute to illegal cross-border capital flows, posing a threat to national financial security [7]