21 Arrested in China for $54M USDT Money Laundering Investigation

Authorities in China‘s Shanxi Province have arrested 21 individuals allegedly involved in a major Tether (USDT) money laundering scheme. 

The scheme, estimated to have generated over $54 million, utilized the US dollar-backed stablecoin USDT to launder money, the country’s national broadcasting service CCTV reported on Tuesday.

According to police investigators, the suspects operated across four provinces and had been engaging in the purchase of discounted USDTs through over-the-counter crypto trading services since October 2021. 

They allegedly made illegal profits by selling the tokens at inflated prices via social media and money laundering platforms.

These transactions amounted to a staggering 54.8 million USDT (equivalent to CNY 380 million) over a span of nearly three years.

During the arrests, authorities seized 40 cellphones, over 1 million yuan ($138,000) in USDT, and more than 200,000 yuan in cash from the suspects’ accounts.

All 21 individuals reportedly confessed to the crime of laundering money for cybercriminals using the stablecoin. The case is currently under further investigation.

Money laundering through cryptocurrencies has become a significant concern for authorities worldwide. 

The anonymous nature of transactions and the ease of transferring funds across borders make cryptocurrencies an attractive choice for criminals looking to legitimize illicit proceeds.

Back in April, the US Treasury revealed that North Korean hackers and scammers exploit loopholes in the decentralized finance (DeFi) space to launder money and hide criminal activity.

“The assessment finds that illicit actors, including ransomware cybercriminals, thieves, scammers, and Democratic People’s Republic of Korea (DPRK) cyber actors, are using DeFi services in the process of transferring and laundering their illicit proceeds,” the Treasury said at the time. 

Chinese Users Find New Ways to Purchase Cryptocurrencies Despite Ban

Despite China’s 2017 ban on cryptocurrency issuance and the subsequent ban on crypto transactions in 2021, Chinese citizens still find ways to access cryptocurrencies.

According to a recent report from the Financial Times, retail crypto shops in Hong Kong have become a popular destination for Chinese investors. 

These shops allow customers to easily purchase digital assets with cash, often without disclosing their identity or the origin of their money.

With cryptocurrency transactions banned on the mainland and overseas exchanges prohibited from servicing onshore clients, Hong Kong’s proximity to China makes it an attractive destination for crypto enthusiasts. 

These retail crypto shops, often lightly regulated, offer a loophole for customers to buy digital assets in large volumes easily, the FT said.