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6 Years Ago, $220,000 Worth of Blood Money from Dongguan Flowed into a US Stock That Surged 38-Fold
Original Article Title: "Six Years Ago, the Blood Money of 220,000 People in Dongguan Flowed into a Stock That Soared 38 Times"
Original Article Author: Lin Wanwan, Beetling from Deepchain
On January 19, 2026, Martin Luther King Jr. Day, the U.S. stock market was closed.
A 35-page short-selling report quietly went online. The title was alarming enough: "The NASDAQ 'Laundromat' of a Southeast Asian Money Laundering Group."
The core conclusion of the report was only one sentence: "AppLovin is the ultimate milestone of 21st-century transnational financial crime."
The publisher, Capitalwatch, is an investigation firm focused on U.S.-listed Chinese stocks. Considering their previous financial fraud allegations against Nova Healthcare that ultimately led to delisting in 2025, investors had reason to take this report seriously.
The next day at the opening, AppLovin's stock price fell by 4.8% in pre-market trading. In the previous three trading days, the stock had already cumulatively dropped by 15%.
Interestingly, three days later, the buying volume of AppLovin continued to increase, indicating that the bullish sentiment was still high.
This constituted a typical Gordian Knot: the short-selling institution said this was a "false empire," while retail investors said this was "another case of being set up."
Who is telling the truth?
Section One: Allegation: Advertising Equals Money Laundering
Capitalwatch's report focused on three key figures.
The first is Hao Tang, a major shareholder of AppLovin.
The report alleges that his wealth includes approximately $957 million in illicit proceeds related to the collapse of the Chinese P2P platform Ezubao and about $2.15 billion in funds related to gambling. Capitalwatch describes him as a "fugitive under judicial pursuit" and claims that "every dollar of his equity is steeped in the tears and blood of victims of illegal fundraising."
The second is Ling Tang, who holds about 20.49 million shares of AppLovin through Angel Pride Holdings, accounting for 7.7% of the company, making her one of the largest individual shareholders. The report alleges that she is the sister of Hao Tang and that her shareholding is "a key part of the Tang family's money laundering network."
The third key figure is Chen Zhi, the founder of the Cambodian Prince Group. In October 2025, the U.S. Department of Justice indicted him for operating forced labor camps and conducting "rug pull" cryptocurrency scams. On the same day, the DOJ announced the confiscation of around 15 billion US dollars' worth of Bitcoin, marking the largest asset seizure in U.S. history. On January 7, 2026, just 12 days before the report was released, Chen Zhi was arrested in Cambodia and extradited.
The report attempts to demonstrate that these three individuals constitute a money laundering network spanning China, Cambodia, and the United States. And it is AppLovin that serves as the ultimate "whitewashing" export for the illicit funds.
The core accusation revolves around a system called the "Mobius Loop": the criminal group pays advertising fees to AppLovin through intermediaries, converting dirty money into legitimate income.
The specific operation is as follows: the Prince Group sets up an advertiser account through a shell company, spending billions to purchase traffic. AppLovin recognizes this revenue as legitimate income in its financial reports, then settles it to overseas accounts controlled by the Prince Group in the form of "developer revenue share." At this point, the fraudulent funds have been transformed into legitimate remittances from a Nasdaq-listed company.
The report also accuses AppLovin's technology of being a criminal tool. The "silent install" mechanism is alleged to allow apps to be implanted on devices without user consent. The AXON algorithm is accused of aiding in the distribution of gambling and scam apps, pinpointing vulnerable users.
If these accusations are true, it would mean that a significant portion of AppLovin's astounding revenue growth in recent years is derived from an "unsustainable criminal group money laundering budget."
But the question remains: how remarkable is this company's performance really?
II. Myth: The AI Darling that Soared 700% in a Year
To understand the devastating impact of this short report, one must first grasp the capital market myth that AppLovin has created over the past three years.
Throughout the whole year of 2025, AppLovin's stock price rose by 108%. In 2024, this figure was even more exaggerated, exceeding 700%, with a market capitalization surpassing $140 billion at one point.
From the lowest point in 2022, AppLovin has surged 38 times. During the same period, Nvidia increased by 10 times, Bitcoin by 6 times, and gold by less than 1 time.
This company was founded in Silicon Valley in 2011, originally a platform to help mobile developers acquire users and monetize. In 2018, it acquired the ad mediation platform MAX, and in 2020, it launched the AI-driven ad optimization engine AXON. It went public on the Nasdaq in 2021, but its performance in the first two years was mediocre.
The turning point came in 2023. After AXON was upgraded to version 2.0, its effectiveness skyrocketed. Just as Apple's iOS 14 privacy changes devastated the entire mobile ad industry, causing Meta to lose hundreds of billions in market value, AppLovin instead rose against the trend. Wall Street began to rediscover this company, labeling it as an "AI beneficiary."
By the third quarter of 2025, the company's revenue had increased by 68% year-on-year to $1.4 billion, marking the second-highest quarterly growth rate in the past four years; net profit grew by 92% to $836 million.
In July 2024, the company sold the game studio Tripledot Studios for $800 million, completing its transformation into a pure ad tech company. A month later, it increased its stock buyback plan by $3.2 billion and joined the S&P 500 Index.
From an unknown mobile ad company to an S&P 500 component and a darling of AI concepts, AppLovin achieved all this in less than two years.
However, doubts have never ceased. In February 2025, both Fuzzy Panda and Culper Research announced short positions, accusing AppLovin of "systematic abuse of app permissions." In March 2025, Muddy Waters joined the battle, claiming that 52% of e-commerce conversions came from redirected users, with an incremental value of only 25%-35%.
With each short attack, the stock price briefly dipped, only to continue rising.
Until this report from Capitalwatch. It no longer dwelled on technical details or financial metrics but instead pointed directly to a more deadly question: where does this company's money come from?
To answer this question, we need to turn the clock back seven years, back to Dongguan, China.
III. Source: The Collapse of Tuan Dai and the "Elder Sister's" 5.3 Million
March 27, 2019, Dongguan, China.
Tuan Dai's founder Tang Jun and co-founder Zhang Lin surrendered to the police. This company, once a top P2P platform in China, collapsed overnight.
Tuandai Network was established in 2012 and, at its peak, facilitated over 130.7 billion RMB in online lending business. Tang Jun himself is a star entrepreneur, serving as a mentor at a startup incubator in Dongguan, often lecturing young people on how to start and fund a company. A company under his control, Derivative Technology, went public on the Shenzhen Stock Exchange, with a market value that once exceeded 20 billion RMB.
Then, in the summer of 2018, the Chinese P2P industry experienced a "massive thunderstorm" event. Tightened regulations, dried-up liquidity, and widespread panic withdrawals led to the collapse of hundreds of platforms within a few months.
Law enforcement swiftly took action, arresting 41 suspects, freezing 3.1 billion RMB in bank accounts, 35 properties, an airplane, and 40 cars. Investigations revealed that before the crackdown, Tang Jun and Zhang Lin attempted to transfer and conceal assets, and later recovered over 880 million RMB of hidden funds.
At the time of the collapse, Tuandai Network had around 220,000 active lenders, involving a total loan amount of 14.5 billion RMB. Most of these individuals were ordinary families lured by high-interest rates, seeing their life savings disappear overnight.
In 2022, the court ruled: Tang Jun was sentenced to 20 years in prison and fined 51.5 million RMB.
The case was closed, but where did the money go? There remains a significant gap between the recovered assets and investor losses.
A report by Capitalwatch claims that part of the answer lies in a extradition hearing held in Bordeaux, France, in 2021.
In that year, a man named Hao Tang flew into France from Iceland on a private jet and was arrested at the airport. An extradition request was subsequently made. However, the Bordeaux Court of Appeal ultimately rejected the extradition under the "political exception" clause, deeming that although the extradition request ostensibly based on money laundering charges, it actually served a political purpose, with Hao Tang's defense team arguing that he was involved in a high-level political case.
Hao Tang regained his freedom. However, the court ruling unexpectedly revealed the money laundering evidence chain.
The judgment showed that during the critical window between the collapse of Tuandai Network, from February 2018 to March 2019, Hao Tang used a network of shell companies to help Tang Jun transfer 632.89 million RMB of illicit funds. Money laundering techniques included fund placements disguised as "aircraft hosting fees," 27 labyrinthine cross-border transfers, and using underground banks for "bidirectional trading" to evade foreign exchange controls.
The court did not deny the facts of these fund transfers.
The judgment also revealed a key detail: a judicial audit found approximately 5.3 million RMB transferred to a company account controlled by Hao Tang's "sister."
This clue later led Capitalwatch to the list of shareholders of AppLovin.
The report, through cross-referencing SEC filings, found that Ling Tang holds a 7.7% stake in AppLovin through Angel Pride Holdings. SEC filings show her contact address on Wing Hong Street, Cheung Sha Wan, Kowloon, Hong Kong, which is in the same neighborhood as the address declared by Hao Tang. In early business registrations, the office addresses of the two individuals had a physical overlap.
The report's conclusion is: "There is sufficient reason to conclude that Ling Tang is the sister of Hao Tang, and the multi-billion-dollar stake held by Angel Pride Holdings is a key part of the Tang family's money laundering network."
However, Ezubao was only the "original accumulation" of funds. To complete the entire money laundering cycle, another key node is needed.
This node is in Phnom Penh, Cambodia.
IV. Undercurrent: The Industrialization of Ponzi Schemes and a $15 Billion Seizure
Chen Zhi, a mysterious tycoon born in Fujian and later naturalized in Cambodia. Over the past decade, he has turned Prince Group into Cambodia's largest business empire, with operations spanning banking, aviation, and real estate.
However, according to the U.S. Department of Justice's court documents, beneath this shining business landscape lies another world. Since 2015, Chen Zhi and his executive team "secretly developed Prince Group into one of Asia's largest transnational criminal organizations."
The indictment paints a chilling picture: Prince Group operated multiple forced labor scam sites in Cambodia, with "large dormitories enclosed by high walls and barbed wire, operating like violent forced labor camps."
The labor force inside the camps was mostly foreign nationals lured in by high-paying jobs; once inside, their passports were confiscated, and under armed guard surveillance, they were forced to work over a dozen hours a day engaging in Ponzi scheme scams. Chen Zhi himself directly participated in violence against camp residents and possessed photos depicting beatings and other torture methods.
By 2018, Prince Group was making over $30 million a day from such fraudulent activities.
In October 2025, the U.S. Department of Justice announced the seizure of approximately $15 billion in Bitcoin, the largest asset seizure action in U.S. history. On the same day, the Treasury Department classified Prince Group as a transnational criminal organization and imposed sanctions on Chen Zhi and over 100 related individuals and entities.
On January 7, 2026, Chen Zhi was arrested in Cambodia and later deported for investigation. The Cambodian Ministry of Interior confirmed that his Cambodian citizenship had been revoked.
A report by Capitalwatch attempts to establish the connection between Hao Tang and Chen Zhi. The report notes that at the end of 2018, on the eve of the Ezubao crisis, a change in control occurred at the Hong Kong-listed company Geotech Holdings, where the sole shareholder of the acquiring BVI company was Chen Zhi. The report suggests that the overlap in operations during this timeframe demonstrates the collaborative relationship between the two in a money laundering network.
The key link connecting the two individuals with AppLovin is the Cambodian super-app WOWNOW.
In May 2022, Prince Bank entered into a payment partnership with WOWNOW, fully integrating the underlying payment system. WOWNOW claims to serve over 800,000 users and is connected to over 13,000 merchants.
However, in a country with a population of only 16 million, why would such a local lifestyle app need to allocate a massive budget on a U.S. advertising platform?
The report's answer is: these advertising expenditures are essentially a money laundering conduit.
Section Five: Rashomon: Who Is Telling the Truth?
The accusations are serious, but AppLovin is not without a defense.
CEO Adam Foroughi has initiated an independent investigation into the activities of the short-selling institutions, insisting that these accusations are "false and misleading" and are driven by "individual economic interests for short-selling gains."
There is also another rational question: "Anything is possible. But if I were to assume that I wanted to launder a large sum of money, I probably wouldn't attempt to do so through a U.S.-registered, Nasdaq-listed entity that is subject to more regulatory scrutiny than a typical global company."
This is a thought-provoking counterpoint. Laundering significant sums of money on a Nasdaq-listed company, subject to SEC oversight, Big Four audits, institutional investor due diligence, and short-selling institution targeting, in such a transparent environment, requires not only courage but also an extremely sophisticated system.
Regarding the ruling of the French court, there are different interpretations. The court's refusal to extradite Hao Tang was based on a "political exception" clause, rather than a denial of money laundering facts. Does this truly prove his innocence, or does it merely indicate that he successfully exploited a legal loophole?
As of January 21, 2026, several key questions remain unanswered.
What is WOWNOW's advertising spending on AppLovin? This is the core verifiable point of the entire "advertising laundering" allegation. The SEC has been investigating AppLovin's data collection practices since October 2025. Does this investigation intersect with Capitalwatch's allegations? If Chen Zhi, after being repatriated, confesses to financial transactions with Hao Tang, will it trigger further scrutiny of AppLovin's shareholder structure by U.S. regulatory agencies?
Currently, AppLovin's short interest is around 5%, indicating that investors remain cautious. The company will announce its fourth-quarter performance in February.
Capitalwatch's ultimate conclusion in the report is: this is an "empire built on quicksand," with its foundation "burying the tears of victims of Ezubao and the sweat of Southeast Asian factory workers."
Time will provide the answer to whether this assessment is correct. However, the questions raised in the report about shareholder background, funding sources, and compliance review are indeed worthy of serious attention from the market and regulatory agencies.
The capital market is never short of myths. Every few years, a company always rises at an astonishing speed, with its stock price skyrocketing, valuation surpassing imagination, and analysts vying to endorse it with the most magnificent terms. In this process, skeptics are often seen as laggards who "do not understand the new paradigm" until one day the tide recedes.
Will AppLovin be the next myth to be debunked, or will it be another occasion where the short-selling institutions retreat in defeat? No one knows. But one thing is certain: in a market where everyone is shouting "AI revolution," there are still those willing to ask, "Where does the money come from?" This, in itself, is a rare form of sobriety.
And for every investor, perhaps the most important lesson is not to take sides but to learn to remain vigilant amidst the frenzy. When a stock rises 700% in a year, when everyone is talking about how advanced its technology is and how miraculous its algorithms are, maybe a few more of the most basic questions should be asked: Who are the major shareholders of this company? Where is their money coming from? Is this money clean?
After all, in the world of capital, the most expensive cost has never been missing out on a ten-bagger but forgetting that across the table in the frenzy, the dealer always sits.
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China's Central Bank and Eight Other Departments' Latest Regulatory Focus: Key Attention to RWA Tokenized Asset Risk
Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:
To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:
Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:
(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.
The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.
A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.
（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.
Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.
(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.
The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.
(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.
(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.
(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.
(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.
(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.
（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.
（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.
（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.
（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.
（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.
（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.
(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.
(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.
(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.
(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.
(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.
This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.
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Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:
To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:
Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:
(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.
The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.
A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.
（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.
Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.
(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.
The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.
(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.
(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.
(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.
(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.
(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.
（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.
（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.
（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.
（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.
（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.
（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.
(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.
(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.
(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.
(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.
(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.
This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.
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