China Police Crack Down on Around 2 billion Dollars Underground Bank Case involving USDT

Police in the Sichuan province of Southeast China have taken down an underground bank operation that exchanges foreign currencies using the USDT stablecoin, with at least 13.8 billion yuan and approximately $1.9 billion in transactions.

According to local media, the case involved 26 provinces across the country, and a total of 193 suspects were arrested in the huge underground bank case, with authorities freezing assets valued at 149 million yuan. The suspects illegally provided foreign exchange settlement channels and avoided national foreign exchange supervision by using Tether (USDT) as a medium.

It all started in November 2022, when the Chengdu Municipal Public Security Bureau's Longquanyi District Branch made the discovery in a drug management case that the suspect had allegedly engaged in illicit foreign exchange criminal activities and had settled funds through underground banks.

The Municipal Public Security Bureau quickly established a task force to investigate the money laundering case. The task force went to Shanghai, Changsha, Nanjing, Shenzhen, Fuzhou, Jinhua, and other locations on June 1, 2023, to conduct arrest operations and capture a group of 25 criminal suspects led by Lin, Weng, and Chen. A large number of bank cards, U-shields, and other payment instruments used in criminal activity were also seized by the task force.

After investigation, it was revealed that the criminal gang originated from the import and export business, using USDT as a medium to provide illegal services to customers who needed to transfer funds abroad. 

As per the report,the criminal group mainly provides illegal foreign exchange services for customers who want to smuggle drugs and cosmetics or purchase assets overseas. The illegal foreign exchange, payment, and settlement business cooperates with other companies through fund settlement to engage in criminal activities such as fraudulently obtaining tax refunds.

Furthermore, it was discovered that the criminal gang used USDT, a stablecoin, as a medium of exchange to evade national foreign exchange supervision and illegally provide foreign exchange settlement channels. 

The underground bank operations of the criminal gang reportedly committed financial fraud, crimes related to employment, obstruction of drug management, smuggling of goods that the state forbids from being imported or exported, credit card management obstruction, defrauding export tax refunds, and other criminal activities. 

In August 2023, the task force used clues and evidence from the investigation of the case to deploy a nationwide crackdown and arrest 168 criminal suspects in 26 provinces across the country.

The announcement of the crackdown coincides with China's nationwide observance of publicity day for combating and preventing economic crimes, celebrated on May 15th. This bust is also one of Sichuan Province's greatest achievements in recent years against underground bank crimes.

In related news reported earlier by whaleinsider.news, Alexey Pertsev, a Tornado cash developer, was sentenced to 64 months in prison for laundering $1.2 billion in crypto.

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