Chinese authorities have discovered an underground banking operation worth $1.9 billion that involved the use of the popular stablecoin Tether (USDT). The illicit activities took place in the city of Chengdu, where the USDT stablecoin was used for foreign currency exchanges. The local police released a media report detailing the operations and announced the arrest of 193 suspects across 26 provinces.
According to the police report, these underground USDT banking operations began in January 2021 and were primarily used for smuggling medicine, cosmetics, and investment assets overseas. The authorities successfully shut down two underground operations in Fujian and Hunan, and they also froze 149 million yuan ($20 million) linked to the USDT banking activities.
Despite the comprehensive ban on cryptocurrency-related activities in China, Chinese traders continue to find ways to circumvent the national restrictions and utilize crypto assets in alternative ways. A recent report from Kyros Ventures reveals that Chinese traders are among the largest holders of stablecoins globally. The report shows that 33.3% of Chinese investors own multiple stablecoins, ranking them second only to Vietnam’s 58.6%.
The Chinese government has banned the use of cryptocurrencies, cryptocurrency exchanges, and Bitcoin mining operations. However, the local population has managed to evade these bans over the years. For instance, despite the Bitcoin mining ban, China’s contribution to the Bitcoin network hash rate rose to second place within a year of the ban. Similarly, after the ban on centralized exchanges, Chinese traders turned to decentralized exchanges. They also increased their use of decentralized finance-based protocols, and some even used virtual private networks to defy the ban.
In light of these developments, it is crucial for crypto holders to protect their assets in a volatile market. Bitcoin OGs and experts offer valuable insights and advice on how to navigate the challenges and safeguard one’s crypto investments.