• 28 May, 2024

Chengdu Police Bust Huge Underground Bank Network Using USDT

Chinese authorities have dismantled a massive underground bank operation that processed billions of yuan worth of illegal foreign exchange transactions. The Chengdu Municipal Public Security Bureau announced that the network, which used Tether (USDT) stablecoin to evade national foreign exchange regulations, handled transactions valued at 13.8 billion yuan ($1.9 billion).

The bust follows an investigation launched in November 2022 by the Longquanyi District Branch of the Chengdu Municipal Public Security Bureau. Following a months-long investigation, authorities apprehended a total of 193 suspects across 26 provinces. After discovering a suspect using an underground bank to settle funds related to obstructing drug management, authorities established a task force to investigate the case.

The investigation revealed that the criminal gang, led by individuals identified as Lin, Weng, and Chen, had been operating since January 2021. The group used USDT as a medium to provide illegal foreign exchange services for smuggling drugs and cosmetics, overseas asset purchases, and facilitating fraudulent tax refunds.

Authorities highlighted the national security risks posed by the network’s activities, which enabled customers to bypass foreign exchange supervision. The investigation also uncovered links to other criminal activities, including financial fraud, money laundering, and obstruction of credit card management.

In a previous case, Chinese authorities dismantled a separate criminal group that laundered over $5 billion using cryptocurrencies. The gang, led by Lai Moumou and Zhang Moumou, allegedly converted illicit funds from fraud and gambling into crypto before exchanging them back to USD for laundering. 

This incident is not isolated in the cryptocurrency space. In a related context, Tether previously took proactive measures by freezing approximately 5.2 million USDT across 12 cryptocurrency addresses after MistTrack identified these addresses for their involvement in suspicious activities such as phishing and theft. On-chain analytics firm SlowMist’s chief security officer noted that these addresses were being used to launder funds from phishing scams, highlighting the complex network of illicit fund transfers that regulatory bodies and organizations continuously strive to disrupt.

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