Chinese police have discovered a large underground banking ring in Chengdu involving Tether (USDT), estimated to be worth $1.9 billion. The operation facilitated foreign currency exchanges illegally.
This news comes shortly after reports of another similar operation being shut down by Chinese authorities, which involved illegal currency exchange using cryptocurrency.
A media report from the Chengdu city police states that 193 suspects across 26 provinces have been arrested in connection with the illegal banking activities. Two related operations were also dismantled in Fujian and Hunan provinces, and 149 million yuan linked to the illegal activities was frozen.
Bypassing China’s Crypto Ban
The underground banking operation started in January 2021 and was used to smuggle items such as medicine, cosmetics, and investment assets overseas. Despite China’s ban on crypto-related activities, Chinese traders are finding ways to use crypto assets through alternative means.
A report by Kyros Ventures reveals that Chinese traders are some of the largest stablecoin holders globally. Chinese investors are second only to Vietnam in holding multiple stablecoins.
In the face of bans on cryptocurrency use and exchanges by the Chinese government, the local population continues to evade these restrictions. After the ban on Bitcoin mining, China’s hash rate rose to second place within a year. Similarly, after centralized exchanges were banned, Chinese traders turned to decentralized exchanges and decentralized finance protocols.
Despite Chinese authorities’ negative stance on crypto, there have been recent developments in the industry. Hong Kong fund managers sought approval for spot Bitcoin and Ethereum ETFs, which were approved shortly after and are now available on the local stock exchange.
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