China's Law Enforcement Dismantles $1.9B USDT Banking Scheme

Learn about the recent arrests and asset seizures related to these activities. Explore how traders are adapting to the ban on cryptocurrency in China.

May 16, 2024 - 11:10
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China's Law Enforcement Dismantles $1.9B USDT Banking Scheme
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Chinese authorities recently discovered an underground banking network involving the popular stablecoin Tether (USDT), valued at $1.9 billion. The operations mainly took place in Chengdu, where USDT was used for exchanging foreign currencies. 

The local police announced the arrest of 193 people across 26 provinces and seized assets worth 149 million yuan ($20 million) related to these activities in Fujian and Hunan. These underground banking activities started in January 2021 and primarily focused on smuggling goods like medicine, cosmetics, and investment assets out of the country.

Despite China's ban on cryptocurrency-related activities, traders continue to find ways to use digital assets. A report by Kyros Ventures shows that Chinese traders hold a significant amount of stablecoins globally. About 33.3% of investors in China hold multiple stablecoins, second only to Vietnam at 58.6%.

Source: (Kyros Ventures)

China's government banned cryptocurrency use, exchanges, and Bitcoin mining. However, traders have shifted to decentralized exchanges and DeFi protocols. Following the ban on centralized exchanges, Chinese traders increased their use of DeFi protocols, some using virtual private networks (VPNs) to bypass restrictions. China's dominance in Bitcoin mining hash rates decreased after the ban, moving the country to the second position globally within a year.