Chinese authorities have recently uncovered a clandestine underground banking network worth a staggering $1.9 billion, with operations centered in the city of Chengdu. The illegal activities involved the utilization of the popular stablecoin Tether (USDT) to facilitate the exchange of foreign currencies. Law enforcement agencies in the city have released a comprehensive report shedding light on the intricate workings of this illicit operation, revealing that a total of 193 individuals across 26 provinces have been apprehended.
According to the police report, the underground USDT banking operations commenced in January of this year and primarily served as a conduit for smuggling goods such as medicine, cosmetics, and investment assets across international borders. In their crackdown on these illegal activities, authorities successfully dismantled two underground operations located in the provinces of Fujian and Hunan. Additionally, they froze assets totaling 149 million yuan, equivalent to $20 million, which were linked to the USDT banking operations.
Despite a nationwide ban on cryptocurrency-related activities in China, Chinese traders have persistently sought alternative ways to circumvent these regulations and continue utilizing crypto assets. A recent report published by Kyros Ventures reveals that Chinese traders rank among the largest holders of stablecoins worldwide, with 33.3% of Chinese investors owning multiple stablecoins. This places them second only to Vietnam, where 58.6% of investors hold stablecoins.
The Chinese government has long prohibited the use of cryptocurrencies, cryptocurrency exchanges, and Bitcoin mining operations. However, the local population has consistently found methods to evade these restrictions over the years. At the time of the Bitcoin mining ban, China held the position of the largest contributor to the Bitcoin network hash rate. Surprisingly, despite the ban, Chinese mining hash rate contribution rose to second place within just one year.
Similarly, when centralized exchanges were banned, Chinese traders swiftly adapted by turning to decentralized exchanges. In the aftermath of the ban, the use of decentralized finance-based protocols by Chinese traders experienced a significant surge, while others resorted to virtual private networks to bypass the restrictions.
In a volatile market, protecting one’s cryptocurrency assets becomes crucial. Industry experts and Bitcoin pioneers provide valuable insights and advice on safeguarding crypto investments in a recent magazine article.