Chinese police have uncovered a $1.9 billion underground banking operation linked to the popular stablecoin Tether.
An underground banking operation that exchanged foreign currencies using the Tether (USDT) stablecoin was operated in Chengdu, China. City police issued a media release highlighting details of the underground operation and said they had arrested 193 suspects in 26 provinces.
The police report noted that the underground USDT banking operation began in January 2021 and was mainly used to smuggle pharmaceuticals, cosmetics and investment assets out of the country.
Authorities destroyed two underground operations in Fujian and Hunan, and police froze 149 million yuan worth $20 million related to USDT banking operations.
Despite China’s comprehensive ban on cryptocurrency-related activities, Chinese traders remain stubborn in circumventing the national ban and utilizing cryptocurrency assets in other ways.
Chinese traders are among the largest stablecoin holders globally, according to a report published by Kyros Ventures. According to the report, 33.3% of Chinese investors own multiple stablecoins, ranking second behind Vietnam (58.6%).
The Chinese government has banned the use of cryptocurrencies and cryptocurrency exchanges, along with Bitcoin (BTC) mining operations. But locals have found ways to get around that ban 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. However, despite the ban, China’s mining hashrate contribution rose to second place just one year after the ban.
Likewise, Chinese traders turned to decentralized exchanges after the country banned centralized exchanges.
The ban has led to a significant surge in the use of decentralized finance-based protocols by Chinese traders, with some using virtual private networks to defy the ban.
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