Chinese police in Sichuan have intensified their crackdown on underground banking networks, focusing on illegal USDT transactions worth billions of dollars.
Authorities in Sichuan province have uncovered a large-scale underground banking scheme involving the use of Tether’s USDT stablecoin. Local reports indicate that the crackdown targeted individuals suspected of evading national foreign exchange regulations and facilitating illegal foreign exchange transactions amounting to nearly $2 billion in USDT.
The suspects allegedly used USDT to bypass national foreign exchange controls and provide illegal foreign exchange settlement services. Authorities have reportedly shut down two underground banking operations in the provinces of Fujian and Hunan. This case has spanned 26 provinces across China, leading to the arrest of over 190 suspects nationwide.
Sichuan has previously been a key player in the crypto industry due to its affordable hydropower, which attracted Bitcoin miners looking for low-cost energy. However, this changed drastically following Beijing’s comprehensive ban on all crypto mining and transactions in the country.
In late 2023, the Supreme People’s Procuratorate (SPP) and the State Administration of Foreign Exchange (SAFE) highlighted criminal cases involving stablecoins. They noted that digital currencies backed by fiat currencies, such as USDT, had become a popular tool for illegal foreign exchange transactions involving the yuan.
Summary Review: The recent crackdown in Sichuan is part of a broader effort by Chinese authorities to regulate the use of cryptocurrencies and combat illegal financial activities. The extensive operation highlights the ongoing challenges in managing digital currencies and enforcing foreign exchange regulations, as well as the significant legal and financial risks involved in circumventing these laws.
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