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Recently, many consultants have asked. I have always heard that it is quite profitable to be a U-commerce business. I have also seen many people doing it online. I wonder if there are any legal risks? So today I will talk about my views on the business of OTC merchants using USDT to arbitrage.

1. What does "arbitrage arbitrage" by OTC merchants (U merchants) mean?

It usually refers to U merchants earning the price difference by buying low and selling USDT high on virtual currency trading platforms such as An, Huo B, and OK.

2. Can U business be done?

The answer is that it can be done. After all, our country does not prohibit transactions between individuals in legal currency and virtual currency. With just two clicks of the mouse, you can make arbitrage profits of tens of thousands or even more through simple buying and selling operations.

but! The above is just an ideal situation. If the U merchant has too many transactions, the transaction flow is too large or the transfers are too frequent, then you will face:

Alipay or WeChat accounts are permanently banned, the bank’s risk control department calls multiple times for investigation, bank cards are frozen, suspected of money laundering, summoned by the police, defrauded...

Facing administrative penalties or having your card frozen or your account blocked is really a headache. U merchants may have to go to banks and administrative departments multiple times to cooperate with investigations and submit written explanations and relevant evidence materials. But the more serious situation involves criminal legal risks.

According to my country's legal provisions and combined with current judicial practice, in OTC transactions, the criminal charges that U merchants may be involved in include: the crime of illegal business operations, the crime of covering up and concealing criminal proceeds, the crime of proceeds of crime, the crime of money laundering, and the crime of assisting information network criminal activities. Crimes of fraud, crimes of opening a casino, etc.

3. Situations involved in the case

Zeng introduced many people to buy virtual currencies and helped others buy and sell them many times through his bank card. He was sentenced by the court to the crime of illegal business operations.

Since OTC transactions are not classified as illegal and criminal activities by Chinese law, and our country does not prohibit transactions between individuals between legal currencies and virtual currencies, then why are OTC merchants involved in illegal operations?

Let’s take a look at the legal provisions. According to Article 225 of the Criminal Law, the crime of illegal business operations “(3) illegally engages in fund payment and settlement business without the approval of the relevant national competent authorities.”

The "illegal engagement in fund payment and settlement" here refers to the act of helping others to carry out large-amount fund transfer business, which is not a cash-out activity.

According to the provisions of the "Payment and Settlement Measures" issued by the People's Bank of China, banks are intermediaries for payment settlement and fund clearing. Non-bank institutions engaged in payment and settlement business must obtain a "Payment Business License" with the approval of the People's Bank of China.

Therefore, if the perpetrator does not have the legal qualifications to engage in fund payment and settlement business and engages in illegally providing domestic fund transfer, dispersed cash withdrawal and other services for others, this crime shall be constituted. For example: money laundering by underground banks.

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