<p>Carbon trading markets facilitate the purchase and sale of carbon credits among nations and corporations to comply with emission regulations. However, as these markets proliferate worldwide, they are increasingly susceptible to fraud, which poses a threat to their efficacy and reputation. Drawing on 761 carbon trading fraud cases in China from 2016 to 2024, this study dissects the operational characteristics and consequences of such crimes. It reveals that the convergence of criminal and administrative procedures, deficiencies in China’s carbon trading legal framework, and judicial inefficiencies constitute the principal challenges in addressing carbon trading fraud. From a law and economics perspective, the article probes the roots of these frauds and critiques the associated risks within China’s carbon trading markets. It also explores fraud cases within the burgeoning field of green criminology. The study concludes that enhancing market transparency, maintaining vigilant oversight of economic activities within the carbon market, and establishing a robust legal system for carbon trading in China are crucial measures to deter carbon trading fraud.</p>