Chinese authorities have successfully dismantled a massive underground banking network that used the cryptocurrency Tether (USDT) to facilitate illegal transactions totaling $1.9 billion. The covert operations, centered in Chengdu, were primarily involved in the illicit trade of medicine, cosmetics, and investment assets across international borders.
Nationwide Sweep Leads to Arrests
In a coordinated effort spanning 26 provinces, police arrested 193 suspects linked to this sophisticated racket. The operation, which commenced in January 2021, exploited the popular stablecoin to bypass China’s stringent currency controls and sanctions against cryptocurrency usage.
Authorities have effectively shut down two major underground sites in Fujian and Hunan, freezing assets worth 149 million yuan (approximately $20 million). These funds were directly associated with the illicit USDT banking activities, representing a significant financial blow to the network.
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Persistent Crypto Use Despite Bans
Despite China’s comprehensive ban on cryptocurrency-related activities, including trading and mining, the persistence of crypto use among the Chinese population underscores a widespread circumvention of the law. Reports from Kyros Ventures highlight that Chinese traders remain among the largest stablecoin holders globally, with a significant percentage of the population continuing to engage in crypto transactions through alternative means such as decentralized exchanges and virtual private networks.
This crackdown not only disrupts a major illegal financial network but also signals China’s ongoing commitment to enforcing its crypto bans. The case reflects the broader challenges regulators face in curbing the decentralized nature of cryptocurrency, especially in regions with strict financial controls.
