Chinese police have uncovered a $1.9 billion underground banking racket involving the popular stablecoin Tether in Chengdu.
The operation utilized Tether to exchange foreign currencies and led to the arrest of 193 suspects across 26 provinces, according to a police report.
The report highlighted that these underground USDT operations began in January 2021.
They were primarily used to smuggle medicine, cosmetics, and investment assets overseas.
The authorities dismantled two such operations in Fujian and Hunan, freezing 149 million yuan (approximately $20 million) linked to these activities.
Despite China’s comprehensive prohibition on crypto-related activities, traders in the country continue to circumvent the ban, using crypto assets in alternative ways.
A report by Kyros Ventures indicates that Chinese traders are among the largest stablecoin holders globally.
According to the report, 33.3% of Chinese investors hold multiple stablecoins, placing them second only to Vietnam’s 58.6%.
The Chinese government has banned cryptocurrency use, cryptocurrency exchanges, and Bitcoin mining operations.
However, the local population has consistently found ways to evade these restrictions over the years.
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At the time of the Bitcoin mining ban, China was the largest contributor to the Bitcoin network hash rate.
Remarkably, within a year of the ban, China’s mining hash rate contribution rose to second place despite the prohibition.
Similarly, after the country banned centralized exchanges, Chinese traders shifted to decentralized exchanges.
In response to the ban, the use of decentralized finance (DeFi) protocols by Chinese traders significantly increased.
Some traders also used virtual private networks (VPNs) to defy the restrictions and continue their crypto activities.
The persistence of Chinese traders in using cryptocurrencies and stablecoins like Tether highlights the challenges faced by authorities in enforcing the ban.
Despite stringent measures, the adaptability and ingenuity of the local population have allowed them to continue participating in the global crypto market.
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