Chinese court jails five Sifang operators over $428M USDT-linked gambling network

How the network worked

The case centered on Sifang’s role as a so-called fourth-party payment service. The platform aggregated payment interfaces from banks and third-party processors, allowing funds from multiple channels to be collected for online gambling websites.

The court said the group set up the operation in May 2022. It linked gambling sites to merchant accounts through 32 collection and payment platforms, while also renting servers overseas and coordinating with operators outside China. Prosecutors treated that structure as an illegal payment business built to support gambling activity.

Sentences and fines

The court upheld the conviction of a defendant identified as Ma, leaving in place a prison term of four and a half years and a fine of 3 million yuan. Zhu was sentenced to five years in prison and fined 800,000 yuan, while Zhang received a six-year sentence and an 850,000 yuan fine.

The other defendants were also jailed, with terms reported to range from three to six years. The ruling therefore left all five operators facing prison sentences for their roles in the payment network.

Tracing USDT transfers

Investigators relied in part on wallet data tied to Tether and records from the exchange OKX to follow the movement of funds. The case shows how blockchain-based transfers can still become part of a financial evidence trail, particularly when combined with platform records and traditional payment data.

At the same time, the court record cited in the report indicated that linking specific token transfers to real individuals remained difficult. One reason was that some of the tokens did not move through exchanges that held identifying records, complicating efforts to match wallet activity to named users.

Profits below early allegations

While the payment volume in the case was large, the court found that the illegal profits were smaller than initially alleged. According to the report, the proceeds tied to USDT wallets and cash conversions amounted to several million yuan.

That distinction matters because the total turnover of a network and the profit ultimately extracted from it are not necessarily the same. In this case, the ruling appears to have drawn a line between the overall transaction flow and the amount treated as illicit gains.

The decision also points to broader challenges Chinese investigators face in crypto-related money laundering and gambling cases, especially when evidence, infrastructure and participants span jurisdictions. Cross-border data access, asset recovery and the technical task of tracing blockchain transfers continue to complicate enforcement even when courts are able to secure convictions.