With the rapid development of the digital economy and cross-border consumption, international gift cards, with their cross-border nature and liquidity, have become the preferred choice for many people to recharge games and make daily purchases, and continue to be popular on the domestic Internet. However, due to the anonymity and other characteristics of international gift cards, criminals have also targeted this "cake" and developed a new form of crime - using international gift cards to resell and earn exchange rate differences. In September 2024, the Procuratorate of Xinmi City, Henan Province, lawfully handled a case of illegally reselling international gift cards to earn exchange rate differences. After being prosecuted by the court, the 20 defendants of the criminal gang were sentenced to imprisonment ranging from seven years and six months to five months of detention for illegal business operations, and each was fined. After the first instance verdict, all the defendants mentioned above appealed. In February of this year, the Zhengzhou Intermediate People's Court rejected the appeal in the second instance and upheld the original verdict. In April 2022, Mr. Zhou, Mr. Zheng, Mr. Lu and Mr. Li set up an Internet Technology Co., Ltd. (hereinafter referred to as "Internet Company") in Guancheng Hui District, Zhengzhou City, and opened a domestic e-commerce department to sell facial mask, decorative paintings and other products on multiple e-commerce platforms. However, only two people participated in this business, which was intended to cover up the illegal behavior of Internet companies reselling international gift cards. After the establishment of the internet company, Zhou and others recruited a large number of salespeople and set up two groups, A and B, in the card merchant department. The four people agreed that Lu would be responsible for Group A of the Card Merchant Department and the company's finance, Zhou would be responsible for Group B of the Card Merchant Department, Zheng would be responsible for business operations, and Li would be responsible for logistics. So, how does the company operate? Zhou and others used cross-border chat software to search for individuals holding gift cards from overseas (commonly known as "little black"), paid them to buy the cards, and then sold the purchased international gift cards to domestic recipients. During this process, Zhou and others used international gift cards as a medium for arbitrage, illegally profiting from the exchange rate difference between naira (Nigeria's legal currency), US dollars, and Chinese yuan by lowering the purchase price. In May 2022, Lu was introduced by Zheng to learn business models from an online company and established a trading company (hereinafter referred to as the "trading company") to share the upstream and downstream resources of the online company and carry out international gift card reselling business in the same way. In October 2023, Lu introduced Zhou to participate and established a chief team studio in an office building in Xinmi City to carry out this business. Thus, a criminal gang consisting of 20 individuals, including internet companies, trading companies, and their studios, was established to illegally resell international gift cards. In March 2024, the Xinmi Public Security Bureau received a clue from its superiors that someone in its jurisdiction was illegally engaged in overseas business, which led to the incident. After arriving at the case, Zhou and others argued that their actions were not illegal, and that the international gift cards they purchased were all settled in RMB and did not involve foreign exchange. Faced with the defense of Zhou and others, the public security organs extracted and analyzed the chat records of the involved mobile phones, and captured clues from them: "It's almost Chinese New Year, everyone needs to pay attention to safety first when making cards. I want to avoid milk pulling (i.e. naira)..." "Be careful, do not make milk pulling or expenditure on goods when making reports..." In addition, there are a large number of card code numbers and transaction exchange rate numbers in the chat records. From this, it can be seen that Zhou and others knowingly engaged in illegal transactions while avoiding supervision, knowing that foreign exchange transactions should be conducted in designated trading venues such as banks, which constitutes a subjective intention of committing a crime. Subsequently, the public security organs compared the fund flow of Zhou and others and found that their fund flow was complex, with abnormal phenomena of multiple payment methods mixed, frequent fast in and fast out, and multiple suspicious one-way payments pointing overseas. Public security officers have gradually improved the evidence chain by collecting and analyzing electronic data, as well as interrogating and supplementing other involved account records. Faced with detailed evidence, Zhou and others finally confessed the process of the crime. So, how should the amount involved by Zhou and others be calculated? The public security organs verify transaction records and fund flow, compare the exchange rate difference between the currency obtained from overseas platform sales and the domestic RMB, calculate the arbitrage amount, and at the same time retrieve the flow of bank accounts and third-party payment platforms to analyze the frequency and matching of fund inflows and outflows, and summarize illegal gains after removing normal transactions. As of the time of the incident, the illegal operating amount of the internet company was 53.72 million yuan, and the illegal operating amount of the trading company was 9.58 million yuan. The two companies earned more than 7 million yuan in exchange rate difference from it. In July 2024, the case was transferred to the Xinmi City Procuratorate for examination and prosecution in order to accurately strike and maintain financial order in accordance with the law. The amount pre deposited in the international gift card involved in the case is all denominated in US dollars. On the surface, the transaction is a card, but in reality, it is through buying and selling cards to seek economic benefits in the exchange rate difference. ”The handling prosecutor stated that international gift cards are single purpose commercial prepaid cards in nature. According to Article 3, Item 2 of the Foreign Exchange Management Regulations, "foreign currency payment vouchers or payment instruments" should be recognized as foreign exchange. According to Article 2 of the Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases of Illegal Fund Payment and Settlement Business and Illegal Trading of Foreign Exchange, those who violate national regulations by engaging in illegal buying and selling of foreign exchange or disguised buying and selling of foreign exchange, disrupt the order of the financial market, and the circumstances are serious, shall be convicted and punished for the crime of illegal business operation in accordance with Article 225 (4) of the Criminal Law. In September 2024, the Xinmi City Procuratorate prosecuted 20 people including Zhou on suspicion of illegal business operations. In December of the same year, the Xinmi City Court made a first instance judgment, sentencing 20 defendants to imprisonment ranging from seven years and six months to five months of detention, and imposing fines on each. After the verdict, the defendant appealed. In February of this year, the Zhengzhou Intermediate People's Court rejected the appeal in the second instance and upheld the original verdict. Unauthorized buying and selling of foreign exchange by individuals will have a negative impact on China's foreign exchange financial order, and is suspected of illegal behavior. Depending on the severity of the circumstances, administrative or criminal penalties will be imposed. The black industry chain identified in this case seriously disrupts the financial order, and is intertwined with multiple crises such as economic imbalance, technological loopholes, and regulatory deficiencies. The spillover effects of derivative crimes pose a severe challenge to China's economic security. ”Wang Hongtao, Director of the Second Procuratorial Department of Xinmi City Procuratorate, introduced that while cracking down on illegal and criminal activities, the court further strengthens analysis and judgment, strengthens division of labor and cooperation with public security, foreign exchange management agencies, and market supervision departments, establishes regular consultation mechanisms, clue transfer mechanisms, information sharing mechanisms, etc., establishes and improves regulatory mechanisms for international gift card transactions, and continuously creates a clean and upright market environment. International gift cards refer to prepaid stored value cards issued by overseas enterprises or financial institutions, usually in virtual form (electronic cards) or physical card form. Users can purchase specific goods or services through the pre deposited amount on the card. The crime of reselling international gift cards has three characteristics: firstly, it is highly covert and has obvious cross-border features. Criminals use VPN technology to break through network supervision and build illegal trading platforms that are linked both domestically and internationally, making it difficult for regulatory authorities to trace the source; Secondly, the payment methods are complex and the funding chain is hidden, often involving multiple payment tools, forming a relatively complex network of fund circulation; Thirdly, the organization is tight and the division of labor is clear. Such crimes have formed a complete industrial chain, involving multiple links and professionals. The illegal transaction chain of international gift cards begins with the upstream acquisition of "source of goods". In addition to purchasing through legitimate channels, criminals may engage in illegal activities such as fraudulently brushing overseas credit cards and stealing e-commerce platform accounts, forming a primitive accumulation of "low cost and high return". In the downstream, international gift cards are also used for economic crimes such as issuing false invoices and evading taxes. Moreover, criminals may use international gift cards as an "invisible tool" for money laundering, and also engage in telecom fraud when consumers use gift cards to input transaction information such as keys. (New Society)