In a major crackdown on cryptocurrency-related illegal activities, authorities in China’s Shanxi Province have arrested 21 individuals involved in an alleged money laundering scheme linked to USDT, a popular stablecoin pegged to the U.S. dollar. According to a report by China’s national broadcasting service, CCTV, the total value of the money laundering operation is estimated to be over $54 million.
USDT, operated by Tether Limited Inc., a subsidiary of Hong Kong-based company iFinex Inc., is known for its stability as it is backed by real-world assets. However, its popularity has also made it a preferred choice for cybercriminals seeking to exploit the anonymity and ease of transactions it offers.
The police investigation revealed that the suspects had been operating across four provinces in China since October 2021. They allegedly engaged in purchasing discounted USDT through over-the-counter crypto trading services. Once in possession of the discounted USDT, the accused reportedly resorted to selling the tokens at higher prices through social media platforms and various money laundering channels, thus generating illegal profits. The total value of these transactions was found to be a staggering 54.8 million USDT, equivalent to approximately 380 million Chinese yuan.
China on crypto
During the arrests, law enforcement officers confiscated a significant amount of evidence, including 40 cell phones, more than 1 million yuan (approximately $138,000) in USDT from the accounts of the accused, and over 200,000 yuan in cash. The case is currently under investigation, and all 21 suspects have reportedly confessed to their involvement in the illicit activities.
One of the reasons USDT has become an attractive choice for money launderers is the ease and anonymity it offers in conducting transactions. Despite China’s strict regulations on cryptocurrency, which began with an outright ban on cryptocurrency issuance in 2017 and extended to crypto transactions in 2021, Chinese citizens have still managed to access cryptocurrencies through decentralized finance (DeFi) platforms and proxy internet servers.
The growing usage of cryptocurrencies for illicit purposes has posed significant challenges for regulators and law enforcement agencies worldwide. While blockchain technology inherently provides transparency through its decentralized nature, it also presents unique challenges when investigating and tracking illicit activities. As a result, governments and regulatory bodies are continuously exploring ways to enhance their capabilities in combating crypto-related crimes.
China’s efforts to crack down on crypto-related crimes demonstrate its commitment to address the risks posed by digital assets. Nevertheless, authorities remain vigilant in monitoring emerging trends in the cryptocurrency space and adapting their strategies to stay ahead of cybercriminals.
