Chinese prosecutors have charged five men with fraud in connection with an over-the-counter USDT transaction in Xuzhou, in China's eastern Jiangsu province, in which an offer of 1.2 million yuan in banknotes was presented but the cash never changed hands.

According to the case, on March 23 a seller surnamed Xiao met five men led by a buyer surnamed Wang on the second floor of a shop in Xuzhou to settle an over-the-counter deal. The proposed terms called for 1.2 million yuan in banknotes — counted and handed over in person — in exchange for a batch of USDT. The cash, however, never moved, and prosecutors have now charged the five men with fraud over the arrangement.

USDT, the stablecoin issued by Tether and pegged to the US dollar, is among the most widely used instruments in over-the-counter cryptocurrency trading, where counterparties often exchange tokens against physical cash in face-to-face meetings. China declared cryptocurrency transactions illegal in 2021, and informal cash-for-USDT trades have persisted despite the ban, leaving participants exposed to counterparty risks, including stalled or fraudulent payments.

The Xuzhou case has progressed to the prosecutorial stage, with the five defendants facing fraud charges. With charges now filed, the matter will move through China's court system toward trial, where the allegation that a 1.2 million yuan cash offer was made and never fulfilled will be examined and adjudicated.

This report was first published by COINOTAG.