As a long-time crypto investor with experience living in and observing the Chinese market, I find the latest news about the $1.9 billion underground Tether (USDT) banking racket quite intriguing. The Chinese authorities’ crackdown on these operations comes as no surprise given China’s comprehensive prohibition on crypto-related activities.
Authorities in China have discovered a hidden $1.9 billion financial scheme centered around the widely-used stablecoin, Tether (USDT).
As a crypto investor, I’ve come across reports of clandestine financial activities taking place in Chengdu, China. These covert transactions utilized the USDT stablecoin for exchanging various foreign currencies. Recently, the city authorities made an announcement through the media, revealing the intricacies of these illicit operations. They disclosed that they had successfully apprehended a total of 193 suspects spread across 26 different provinces.
An USDT underground banking system emerged in January 2021, according to the police report, serving mainly as a conduit for transporting medicines, cosmetics, and investment assets out of the country.
As a crypto investor, I’ve recently learned that law enforcement authorities have dismantled clandestine operations in Fujian and Hunan provinces. Simultaneously, they seized and frozen approximately 149 million yuan, which translates to around $20 million, allegedly linked to USDT banking activities.
As a financial analyst, I’ve observed that despite China’s strict regulations banning cryptocurrency-related activities, Chinese traders continue to find creative workarounds to engage with crypto assets.
According to a study released by Kyros Ventures, Chinese investors represent the second largest segment of global stablecoin holders, with approximately one-third (33.3%) keeping substantial amounts of these assets. This finding places Chinese traders just behind their Vietnamese counterparts (58.6%), suggesting a greater propensity for risk-taking among this demographic.
The Chinese authorities have prohibited the utilization of cryptocurrencies and the functioning of related trading platforms, as well as Bitcoin mining activities within their jurisdiction. Nevertheless, local residents have discovered methods to bypass this restriction throughout the past few years.
During the Bitcoin mining prohibition, China held the position of being the top contributor to the Bitcoin (BTC) network’s hash rate. Surprisingly, this significant contribution plummeted to almost nothing following the ban. Yet, within just a year, Chinese miners managed to regain their status as the second largest contributors, demonstrating that despite regulatory restrictions, individual miners persisted in their operations.
After the ban on centralized exchanges in the country, Chinese traders shifted towards utilizing decentralized protocols for conducting their trades instead.
After the implementation of the ban, Chinese traders showed a noticeable increase in their utilization of Decentralized Finance (DeFi) platforms. Some traders circumvented the restriction through the employment of Virtual Private Networks (VPNs).
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2024-05-16 11:12