Chinese Authorities Bust $55M USDT Money Laundering Scheme

Table of Contents

• A Major Bust
• Modus Operandi  
• Suspects Confess
• China’s Stance On Crypto

Enforcement authorities in China’s northern province of Shanxi have uncovered an alleged USDT money laundering scheme amounting to over $55 million.

According to local news reports, the police have arrested 21 individuals in connection with the money laundering ring.

A Major Bust

The laundering operation came to light when authorities in Qinshui County observed that a bank account operated under the name of Mouyue Zhao had a highly erratic flow of funds. This abnormal flow of funds sparked suspicions of money laundering, leading to the police launching a thorough investigation. The investigation revealed staggering details about how an organized group of criminals had been orchestrating an over-the-counter (OTC) trading ring involving USDT since October 2021, according to a report by China’s national broadcasting service.

USDT is the world’s largest stablecoin and has its value pegged to the US Dollar. It is operated by Tether Limited Inc.

Modus Operandi  

Investigators revealed that the accused individuals operated across four provinces, purchasing USDT at a low price and then selling it at higher prices through WeChat groups and money laundering platforms and making significant illegal profits. Authorities stated that the laundering operation had completed transactions totaling nearly $55 million over the nearly three-year period of their operations.

Authorities were able to track down members of the operation across six cities in the provinces of Jiangxi, Henan, Guangxi, and Anhui. Over 50 officers were dispatched to arrest the perpetrators. Along with the arrests, the police also seized over 40 mobile phones, along with 200,000 yuan ($28,000) in cash and over 1 million yuan worth of USDT ($140,000).

Suspects Confess

The suspects were interrogated by the authorities and, according to local news agencies, have confessed to the accusations made against them. The accusations include facilitating the conversion of the Chinese Yuan to USDT and helping criminals launder their money. However, the case is still open and remains under investigation. According to the authorities, USDT has quickly become a preferred choice for crypto money launderers thanks to the ease and anonymity that it offers.

China’s Stance On Crypto

China has historically taken a tough stance against crypto. However, the country’s stance comes as no surprise to long-time observers of the crypto space. Chinese citizens first caught wind of cryptocurrencies in 2011 thanks to the centralized exchange Bitcoin China, set up by Bobby C. Lee. Bobby C. Lee is the brother of Litecoin’s Charlie Lee. During the early days of Bitcoin, Bitcoin China was responsible for a significant chunk of the global Bitcoin trading activity.

Bitcoin soon became widely accepted in China, with businesses beginning to accept it as payment. However, 2013 saw China’s first attempt at stifling the crypto space in the country, even though Bitcoin adoption was skyrocketing, with the People’s Bank of China prohibiting banks from holding or transacting in digital currencies. However, Chinese citizens could still buy, send, and store crypto. During the 2017 bull run, Chinese authorities put further sanctions on the crypto space, outlawing all platforms offering ICOs (Initial Coin Offerings). Additionally, authorities also forced several exchanges to shut down operations.

In 2021, Chinese officials banned crypto mining, effectively crippling the industry in China. The impact on the markets was severe, with Bitcoin’s hash rate falling to 50% and its price registering a dramatic drop. Along with the ban on mining, authorities also outlawed all crypto trading and transactions. Additionally, anyone working with Chinese firms associated with the crypto space could potentially face jail time. However, despite all these hurdles, Chinese citizens can still access cryptocurrencies through proxy internet servers and decentralized finance (DeFi) platforms.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.