Chinese Police Bust $1.9 Billion Crypto Banking Ring
Chinese police dismantled a $1.9 billion underground crypto banking network, arresting 193 suspects and seizing $20 million in assets linked to Tether (USDT).
Chinese police recently busted a massive $1.9 billion underground banking network using Tether (USDT), a popular stablecoin. The operations, centered in Chengdu, were dismantled in Fujian and Hunan provinces. Authorities froze assets worth 149 million yuan ($20 million) linked to these activities. The police arrested 193 suspects across 26 provinces. The underground operations began in January 2021 and were used to smuggle goods like medicine and cosmetics overseas. Despite China's strict ban on cryptocurrency activities, traders have found ways to bypass these regulations.
A Kyros Ventures report shows that Chinese traders are significant stablecoin holders, with 33.3% of investors holding various stablecoins. This makes them second only to Vietnam, where 58.6% of investors hold stablecoins. China has banned cryptocurrencies, exchanges, and Bitcoin mining. Despite this, Chinese miners quickly adapted, making China the second-largest contributor to the Bitcoin network hash rate within a year of the ban.
After banning centralized exchanges, Chinese traders shifted to decentralized exchanges (DEXs) and decentralized finance (DeFi) protocols. They also used virtual private networks (VPNs) to continue trading. This recent bust highlights the ongoing conflict between Chinese authorities and crypto traders. Despite strict regulations, the demand for cryptocurrencies remains high, and traders continually find ways to bypass restrictions.
The Kyros Ventures report emphasizes the persistence of Chinese investors in the crypto market. Even with bans, traders use covert and decentralized methods, maintaining substantial holdings in stablecoins for capital preservation and international transactions. Chinese crypto traders have shown resilience by adapting to regulations, as seen in their quick recovery in Bitcoin mining contributions. The $1.9 billion USDT underground banking bust underscores the enduring tension between regulatory efforts and the crypto community in China.
