• 28 May, 2024

Tether Laundering Rings Exposed: 21 Members Convicted in China

The global crypto community was stunned as a landmark verdict emerged from Tongliang, near Chongqing in China. 21 individuals, forming a well-orchestrated syndicate, were found guilty of converting a whopping 2.25 billion RMB ($307 million) from ‘dirty’ Tether (USDT) to Chinese Yuan (RMB). This massive fraud investigation has led many to rethink the security protocols surrounding crypto exchanges and the magnitude of transactions happening beneath the radar.

Jiang and Zheng, the ringleaders behind this grand scheme, were adept at exploiting the loopholes in the crypto ecosystem. With 19 accomplices, they skillfully maneuvered through decentralized wallets like Bitpie, echoing popular tools like Metamask. Their modus operandi involved moving the USDT to local P2P virtual exchanges, later converting it into Yuan.

On withdrawing the converted cash, they covered their tracks by fabricating reasons such as project payments or workers’ wages. Jiang, the more prominent of the two masterminds, amassed 22.62 million RMB ($3 million) from the scam.

The court’s stringent stance was clear: no leniency for those tarnishing the nation’s financial image. Jiang faced a six-year, three-month prison term and a hefty 500,000 RMB fine. His accomplice, Zheng, wasn’t far behind, receiving a 6-year sentence with an identical fine. This stern action is a testament to China’s commitment to rooting out financial miscreants.

For those familiar with Southeast Asia’s crypto underbelly, USDT’s involvement doesn’t come as a surprise. The digital asset has often been the preferred choice for numerous fraud rings in the region. Zeke Faux, in his latest book, Number Go Up, sheds light on how Tether has unknowingly become the backbone for these fraudulent enterprises.

Interestingly, this revelation follows another significant incident. The JPEX cryptocurrency exchange scandal in Hong Kong led to the arrests of eight individuals, which included influential social media personalities. They were implicated in a fraud impacting more than 1,600 investors, leading to a loss of over $150 million in assets.

Hong Kong’s chief executive, John Lee, emphasized the importance of licensed platforms, stating, “The SFC will monitor the situation very closely and ensure that investors are sufficiently protected.” 

The events in both Tongliang and Hong Kong have ignited fresh discussions on digital asset regulations. This surge in attention aims to prevent the rapidly growing crypto market from being exploited by scam artists.

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