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

Chinese police in Sichuan have reportedly intensified their crackdown on underground banking networks, focusing particularly on USDT transactions worth billions of US dollars.

Chinese police in Sichuan province have reportedly uncovered a large-scale underground banking scheme with operations involving the use of Tether’s USDT stablecoin. According to local reports, the crackdown targeted suspects who allegedly evaded national exchange controls and facilitated illicit currency transactions involving approximately $2 billion worth of USDT.

The report alleges that the suspects used the stablecoin as a tool to bypass national foreign exchange regulations and provide illegal currency exchange channels. Authorities are said to have shut down two underground banking centers located in China’s Fujian and Hunan provinces. The case has reportedly spread to 26 provinces of China, and more than 190 suspects have been arrested by police across the country.

While Sichuan had previously played a major role in the crypto industry due to its cheap hydropower generation electricity, attracting Bitcoin miners seeking low-cost energy for their operations, the landscape quickly changed after Beijing imposed a blanket ban on all crypto mining operations and transactions in the country. .

In late 2023, the Supreme People’s Procuratorate (SPP) and the State Administration of Foreign Exchange (SAFE) highlighted criminal cases related to stablecoins, stating that digital currencies backed by fiat currencies are a popular intermediary for trading yuan with other currencies in cases related to illegal events He emphasized that it has become foreign currency.