In a recent crackdown, Chinese authorities uncovered a stash of $1.7 million in illicit gambling funds during a raid on a casino, highlighting concerns for the well-being of the participants. The discovery of over $9 billion being funneled through the Tether stablecoin on an illicit underground banking platform marked one of the largest financial frauds to date.

As part of their enforcement actions, Chinese officials shut down two clandestine operations in Fujian and Hunan, managing to freeze assets totaling 149 million yuan, equivalent to $20 million, associated with the illicit USDT transactions. Notably, in Chengdu, the Tether stablecoin was utilized for converting foreign currencies, leading to the arrest of 193 suspects across 26 provinces.

Tether Laundering Crackdown

The illicit USDT operations, initiated in early 2021, primarily focused on smuggling medical goods, cosmetics, and investment assets overseas, as per law enforcement reports. Authorities dismantled two separate underground networks in Fujian and Hunan provinces, seizing $20 million linked to USDT transactions.

Despite China's stringent ban on cryptocurrencies, the resilience of crypto traders in circumventing the restrictions through innovative use of digital assets is truly remarkable. Kyros Ventures' comprehensive analysis positions Chinese traders as major players in the stablecoin market globally, underscoring their preference for transparency and asset categorization.

Circumventing China's Crypto Restrictions

While the Chinese government exerts strict control over cryptocurrency activities, including trading and mining, certain local communities have persistently flouted these regulations. Following the ban on Bitcoin mining in China, a significant portion of miners relocated to other countries such as the USA, Kazakhstan, and Russia, resulting in China swiftly regaining its position as a major contributor to the Bitcoin network's hash rate.

Moreover, the prohibition of centralized exchanges (CEXs) in China prompted a shift towards decentralized exchanges (DEXs) among Chinese users to sidestep regulatory hurdles. The surge in Chinese traders adopting DEX-based protocols, some resorting to virtual private networks to access untapped opportunities, signifies a dynamic response to the evolving cryptocurrency landscape.