Sichuan police uncover underground finance scheme involving $2b in USDT

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As a crypto investor who has closely followed the developments in China’s cryptocurrency scene, I can’t help but feel a sense of unease as I read about the latest crackdown on underground banking networks using Tether’s USDT stablecoin.

Authorities in Sichuan, China are reportedly increasing efforts to dismantle clandestine financial operations, specifically targeting USDT transactions worth billions of U.S. dollars.

As a researcher, I’ve come across reports that Chinese authorities in Sichuan province have recently uncovered a vast underground banking operation. This intricate network reportedly utilized Tether’s USDT stablecoin for its transactions. According to local sources, the police focused their efforts on suspects who were alleged to be circumventing national foreign exchange regulations and facilitating illegal foreign exchange deals worth approximately $2 billion in USDT.

I have found in my investigation that the suspects allegedly employed the use of stablecoins to bypass national foreign exchange laws and establish clandestine channels for illicit foreign exchange transactions. According to reports, law enforcement has dismantled two hidden banking networks situated in Fujian and Hunan provinces in China. This case is said to have reached 26 different provinces within the country, resulting in over 190 suspects being apprehended by the police nationwide.

Previously, Sichuan’s affordable hydroelectric power made it a key player in the cryptocurrency industry, drawing Bitcoin miners with their energy-efficient operations. However, this scenario shifted drastically after China imposed a nationwide prohibition on crypto mining activities and transactions.

As a financial analyst, I’ve noticed an important development in the Chinese regulatory landscape. In the final quarter of 2023, the Supreme People’s Procuratorate (my role is equivalent to a prosecutor in this context) and the State Administration of Foreign Exchange (SAFE), two key authorities in China, drew attention to criminal cases involving stablecoins. These digital currencies, which are pegged to traditional fiat currencies, have emerged as a favored tool for yuan trading with other currencies in instances of illegal foreign exchange transactions.

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2024-05-15 10:45