Haider Jamal

May 16, 2024

Chinese Authorities Initiate Crackdown On Massive Operation Linked With Tether

Chinese law enforcement authorities have made a significant breakthrough in their efforts to combat illegal financial activities. They have dismantled a sizable underground banking network believed to be facilitating unlawful transactions using the USDT stablecoin. The operation, which spanned across multiple provinces, has reportedly facilitated over $2 billion worth of illicit USDT transactions.

Recently, Tether froze approximately $5.2 million USDT in response to findings by the crypto tracking and compliance platform MistTrack. The platform identified 12 Ethereum addresses associated with phishing operations, prompting Tether to implement new security measures in collaboration with Chainalysis to monitor secondary markets and detect suspicious transactions promptly.


A Huge Case

A major underground banking case involving a massive 13.8 billion Yuan ($1.9 billion) was uncovered by the Chengdu Municipal Public Security Bureau, according to local reports. 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 jurisdiction initiating 58 cases. Authorities have also seized 149 million Yuan in funds linked to the operation.

The investigation began in November 2022 when the Longquanyi District Branch flagged suspicious fund settlements through underground banks, indicating potential involvement in illegal foreign exchange activities.

The Chengdu Municipal Public Security Bureau formed a task force comprising various departments, including economic investigation, cyber security, legal affairs, and technical investigation. On June 1st, 2023, the task force conducted coordinated arrest operations in several locations under the command of the Ministry of Public Security and the Public Security Department.


The Crackdown

25 criminal suspects, including Lin, Weng, and Chen, were apprehended, and significant evidence, such as bank cards and payment instruments, was seized. The investigation uncovered that the criminal gang, led by Lin, Weng, Chen, and others, primarily operated within the import and export business sector.

Authorities claim they exploited USDT to provide illegal services to customers seeking to transfer funds abroad, primarily involving illegal foreign exchange, payment, and settlement businesses. These activities reportedly facilitated various criminal operations, including drug smuggling, overseas asset purchases, and fraudulent tax refund schemes.

Tether has taken swift action against criminal operations utilizing its digital currency in response to allegations of involvement in illicit activities. Tether CEO, Paolo Ardoino, has reiterated the company remains committed to combating illicit activity and has denounced Tether as the dumbest choice for doing illicit activity.


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