In a recent ruling, the People's Court of Yangpu District in Shanghai, referred to as "Yangpu Court," has finalised the first case in Shanghai involving the exploitation of the digital RMB, or otherwise known as e-CNY, through a "score running" operation.

How it Went Down

In late May 2023, a suspect named Wang arrived at an ATM in Yangpu District, Shanghai.

In just two hours, using over 10 different mobile numbers to register digital currency accounts, Wang withdrew 123,000 yuan (approximately $17,000 USD) using the ATM's digital RMB exchange function, nearly emptying the cash stored in the machine.

The unusual number of accounts, excessively frequent transactions, and the rapid withdrawal of substantial sums raised alarms among bank staff.

Promptly reporting the incident led to the exposure of a criminal network utilising digital RMB accounts for upstream crimes such as telecommunications fraud and gambling.

Investigations revealed that, starting from May 2, 2023, a leader named Xiao, seeking unlawful profits, recruited individuals to form a "score running team."

Exploiting the features of non-real-name digital RMB accounts and the ATM cash withdrawal function, they orchestrated a scheme to transfer illicit funds for upstream criminals while earning such "service fees."

Chain of Command

Xiao, as the team leader, communicated with criminals upstream, determined the required withdrawal amounts, purchased virtual currency from Gong and Huang, and paid the obtained virtual currency to the designated account.

Upon receiving the corresponding digital RMB account and password, Xiao forwarded it to the "drivers" like Wang, who used these details at bank branches to withdraw cash through ATMs, subsequently transferring it to specified bank accounts.

This operation, facilitated through digital RMB and virtual currency transactions, effectively laundered illicit funds.

During this period, to earn more "service fees," Xiao purchased multiple phone numbers and over 30 mobile phones from others.

He registered multiple non-real-name digital RMB accounts (four types) to receive funds and employed the same method to withdraw money from these accounts.

After judicial scrutiny, from May to June 2023, Xiao's "score running team" withdrew over 10 million yuan from more than 900 digital RMB accounts, with over 800,000 yuan originating from victims of telecommunications fraud.

Crime and Punishment

After due deliberation, Yangpu Court sentenced Xiao, Kan, Wang, Yang, Feng, and Xu to prison terms ranging from seven months to four years and six months, along with fines ranging from 5,000 to 45,000 yuan.

Gong and Huang were sentenced to one year and four months in prison, along with a fine of 10,000 yuan, for aiding information network crime activities.

The judgment hinged on establishing the subjective element of the extent in which the prosectued knew about the criminal proceeds.

The court considered various factors such as cognitive ability, past behavior, frequency of actions, and deliberate evasion of investigation to determine whether the accused individuals had the requisite knowledge.

The court applied criteria from the Supreme People's Court regarding the severity of the offense related to concealing and disguising criminal proceeds.

In this case, the total value of concealed proceeds exceeded 100,000 yuan (about $14,000 USD), reaching the threshold for "seriousness."