Chinese Officials Reveal Suspected $2 Billion USDT Money Laundering Scheme

• Chinese authorities have revealed a major underground banking operation linked to an astonishing $2B USDT money laundering scheme.

Chinese law enforcement has reported a significant advancement in their efforts against unlawful financial practices.

They have disbanded a substantial underground banking group purportedly involved in facilitating illicit transactions utilizing Tether’s USDT stablecoin.

This operation spans several provinces and is estimated to have facilitated more than $2 billion in unlawful USDT transactions.

193 Suspects Detained in Tether-Related Banking Scandal

As per local media sources, the Chengdu Municipal Public Security Bureau has uncovered a notable underground banking case involving approximately 13.8 billion yuan ($1.9 billion).

The operation extended across 26 provinces, municipalities, and autonomous regions. A total of 193 suspects have been apprehended nationwide, with public security agencies in each area filing 58 cases. Authorities have also frozen 149 million yuan in assets linked to the operation.

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The investigation commenced in November 2022 when the Longquanyi District Branch detected suspicious fund settlements through underground banks, suggesting possible involvement in illegal foreign exchange activities.

The Chengdu Municipal Public Security Bureau reportedly established a task force comprising various departments, including economic investigation, cyber security, legal affairs, and technical investigation.

On June 1, 2023, the task force executed coordinated arrest operations in Shanghai, Changsha, Nanjing, Shenzhen, Fuzhou, Jinhua, and other areas under the direction of the Ministry of Public Security and the Public Security Department.

This resulted in the detention of 25 criminal suspects, including Lin, Weng, and Chen, along with the seizure of significant evidence, such as bank cards and payment instruments.

$1.9 Billion Illegal Scheme Exposed

The investigation disclosed that the criminal organization, led by Lin, Weng, Chen, and others, primarily functioned within the import and export business sector.

Authorities further assert that they allegedly utilized USDT as a means to offer illegal services to clients wishing to transfer funds overseas.

Their operations mainly involved illegal foreign exchange, payment, and settlement activities, which reportedly facilitated the smuggling of drugs and cosmetics, overseas asset acquisitions, and fraudulent tax refund schemes.

According to the report, Tether’s stablecoin usage allegedly enabled it to bypass national foreign exchange oversight, presenting “substantial risks” to foreign exchange security and financial management.

By reportedly employing USDT and collaborating with other firms for fund settlements, the gang engaged in various criminal activities, including financial fraud, job-related crimes, drug management obstruction, smuggling of prohibited goods, credit card fraud, and export tax refund fraud.

Crackdown on Criminal Activities

Tether has promptly addressed criminal activities involving its digital currency in light of allegations regarding its participation in unlawful actions.

Paolo Ardoino, the company’s CEO, has consistently reiterated the firm’s dedication to combating illicit activities and has referred to Tether as “the dumbest choice for doing illicit activity.”

Recently, Tether also took a decisive measure to counter illicit activities by freezing around $5.2 million USDT. This action was prompted by findings from the crypto tracking and compliance platform MistTrack.

The platform identified 12 Ethereum addresses linked to phishing operations, which posed threats to users and the integrity of the cryptocurrency ecosystem.

Tether has also instituted new security protocols aimed at deterring unlawful financial activities.

In partnership with Chainalysis, a crypto tracking and compliance platform, the stablecoin issuer has developed a tool specifically designed to monitor secondary markets.

This allows Tether to promptly identify and address any suspicious or unauthorized transactions.

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