Chinese Police Burst $2B Tether Money Laundering Ring

Tether USDT

Chinese police exposed $2 billion in illegal transactions using the USDT stablecoin.

The police in Sichuan Province, Southeast China, have exposed an underground bank that utilized the USDT stablecoin for foreign currency exchanges, with transactions amounting to 13.9 billion yuan, approximately $2 billion. According to a state media report posted by the police in Chengdu city on Thursday, the criminal group was engaged in facilitating illegal transactions using Tether’s USDT stablecoin.

The operation spanned 26 provinces, municipalities, and autonomous regions. Nationwide, authorities have arrested 193 suspects in connection with this case, with assets totaling 149 million yuan frozen, as stated in the report.

Unveiling $2B in Criminal Transactions

The investigation began in November 2022, when the Longquanyi District Branch identified suspicious fund settlements through underground banks, indicating potential involvement in illegal foreign exchange activities. Reportedly, the Chengdu Municipal Public Security Bureau formed a task force consisting of various departments, including economic investigation, cyber security, legal affairs, and technical investigation.

On June 1, 2023, a task force conducted arrest operations in Shanghai, Changsha, Nanjing, Shenzhen, Fuzhou, Jinhua, and other areas, directed by the Ministry of Public Security and the Public Security Department. The operations resulted in the apprehension of 25 criminal suspects, including the surnames Lin, Weng, and Chen, and the seizure of significant evidence, such as bank cards and payment instruments. 

Chinese authorities claim that individuals allegedly used USDT to provide illegal services to clients looking to transfer funds internationally. These activities included unauthorized foreign exchange, payment, and settlement operations, which reportedly facilitated drug trafficking, counterfeit cosmetics distribution, overseas asset acquisitions, and fraudulent tax refund schemes. According to the report, the use of Tether’s stablecoin allegedly allowed bypassing national foreign exchange regulations, posing “significant risks” to foreign exchange security and financial oversight.

This burst follows a previous case in Jilin Province, where a separate underground bank involving $296 million was uncovered. It was found that cryptocurrency was also being used for currency conversions. In recent years, China has enforced strict capital control policies, prompting some individuals to turn to cryptocurrency as a way to bypass these regulations.