Chinese courts jail Sifang payment ring as USDT trail exposes $428m gambling network
Five operators sentenced in China after Tether wallet and exchange data helped trace a $428m illegal payment network tied to gambling.
Chinese courts have handed down prison terms of between three and six years to five operators of the Sifang payment platform, closing a prosecution that hinged on tracing USDT wallet activity and exchange records back to an illegal gambling settlement network worth roughly $428 million.
The Intermediate People’s Court of Xilin Gol League in Inner Mongolia upheld the final conviction in the case on 26 June, confirming a four-and-a-half-year sentence and a three million yuan fine against defendant Ma, according to court records reported by The Paper. The ruling closes out a group of prosecutions that has run through Chinese courts over the past year.
Stablecoin transfers under forensic scrutiny
Investigators built their case using Tether wallet data alongside records from the OKX exchange, allowing them to reconstruct how commissions and rebates moved through crypto addresses even as other payments in the network flowed via ordinary bank cards. Court documents show the operation processed more than 2.95 billion yuan — about $428 million — between 24 May 2022 and 18 October 2023, routed through 105 merchant accounts tied to ten separate third-party payment firms.
The case illustrates a shift that regulators and law-enforcement bodies across jurisdictions have been quietly pursuing: treating stablecoin transfers not as an obstacle to investigation but as a traceable ledger that can corroborate conventional banking evidence. For UK and European supervisors watching stablecoin adoption accelerate under frameworks such as MiCA, the episode is a reminder that on-chain settlement layers are increasingly legible to prosecutors, not merely to compliance teams.
A fourth-party payment operation, not a licensed processor
Sifang functioned as what Chinese court filings describe as a “fourth-party”, or aggregated, payment service — a system that stitched together interfaces from banks and licensed third-party processors so that merchants could collect funds across multiple channels through a single platform, without holding a payment licence itself. Prosecutors treated this as unlicensed payment settlement and charged the defendants with illegal business operations rather than gambling offences directly.
According to the earliest judgment in the series, defendants Zhu, Zhang, Tang, Du and Ma began assembling the network in May 2022 after identifying that payment services for gambling operators could generate substantial margins. The group is said to have commissioned 32 collection and payment platforms, rented servers located outside China, and made direct contact with individuals running gambling websites hosted overseas.
Court findings describe a division of labour: Zhu and Zhang managed payment routing, liaised with third-party providers, handled customer complaints and arranged profit distribution, while Ma introduced payment channels, supplied merchant registration materials and assisted with account openings and transaction issues. Prosecutors had initially alleged the group earned 42.85 million yuan by taking a 1.45% commission on merchant transfers linked to the overseas gambling sites.
Sentences and financial penalties
Zhang received the heaviest sentence, six years, alongside an 850,000 yuan fine. Zhu was sentenced to five years and fined 800,000 yuan. The remaining defendants, including Ma, received terms ranging from three to six years with fines set individually by the court, which also ordered authorities to recover 2.95 million yuan in illegal income attributed to Ma.
The case adds to a growing body of Chinese enforcement actions against payment intermediaries servicing offshore gambling operators, and it signals that stablecoin flows — often assumed by users to sit outside conventional financial surveillance — are now a standard evidentiary thread in such prosecutions, alongside bank records and exchange data.
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