China Tether Laundry, Bhutan, Recent Bitcoin Surge: Asia Express

We round up the weekly news from across Asia, highlighting the most important industry trends.

Dirty Tedder Laundry Service

A court in China’s northwestern Gansu province has reportedly found 10 people guilty of involvement in a Tether (USDT) money laundering service case.

The defendants were sentenced to prison terms ranging from 10 months to a year, and authorities recovered more than $168,000 (1.2 million yuan) in illicit profits, according to The Paper, a state-run online news outlet.

The scam, led by a man named Shen, operated a USDT trading studio that laundered cryptocurrency profits from online gambling and telecommunications fraud.

Shen and his accomplices allegedly knew that the cryptocurrencies were derived from illegal activities. They converted the illegal cryptocurrencies into fiat currency at high rates to make a profit.

According to court documents cited by The Paper, Shen began operating in early 2022 by recruiting several associates to run the illicit cryptocurrency exchange. Together, they leased real estate and provided the tools (computers, software, devices) needed to conduct the money laundering business.

They then formed a trading group on the popular messaging platform Telegram and conducted over-the-counter (OTC) trading in USDT, i.e. buying USDT at a discount from criminals involved in telecom fraud and selling it to other customers at a higher price.

The court ruled that the group made more than $124,000 (880,000 yuan) through these operations, but their money laundering business is believed to have helped them steal more than $834,000 (5.9 million yuan) from their victims.

The incident is a reminder that China continues to take a hard-line stance on cryptocurrencies.

There have been recent rumors that China may lift its ban on cryptocurrency trading in the fourth quarter of 2024, but Chinese authorities have yet to hint at such a possibility.

In August, China’s highest court, the Supreme People’s Court, revised its anti-money laundering laws to include virtual assets for the first time.

In July, Beijing held the Third Plenary Session, a meeting of the Communist Party’s top cadres, which again focused on promoting the central bank digital currency internationally, which China regards as the only legal digital currency. All other digital currencies, including Bitcoin, remain illegal for payments.

Bhutan’s Bitcoin Investments Grow by $70 Million Since Arkham’s Identification

The tiny landlocked kingdom of Bhutan may be rejoicing this week after its Bitcoin holdings surpassed $830 million after a slight rally in the price of the currency.

According to data released by Arkham Intelligence on September 16, Bhutan has been identified as the government with the fourth largest Bitcoin holdings in the world.

When first reported, the South Asian country’s Bitcoin holdings were valued at around $758 million.

As the Bitcoin price surpassed $63,000 on September 19, investment in Bhutan also increased.

As of September 19, Arkham data shows that the Royal Government of Bhutan holds 13,058 BTC, worth approximately $832.7 million.

The government also owns $1.6 million worth of Ether.

Bhutan is a small landlocked country in the Eastern Himalayas with a population of less than 800,000, but its Bitcoin holdings are estimated to be more than double that of El Salvador, a country often noted for its adoption of Bitcoin.

While El Salvador’s Bitcoin strategy has been gaining worldwide attention, Bhutan’s reserves have quietly grown through mining operations run by the state-owned fund Druk Holding and Investments. Arkham says many other governments with significant Bitcoin holdings acquire them through asset seizures by law enforcement.

Cambodia pushes back against US sanctions on senator over alleged involvement in cryptocurrency scam

The Cambodian government has fought U.S. sanctions targeting senator and businessman Ly Yong Phat, who is accused of promoting forced labor in online scams involving cryptocurrencies.

Cambodia has condemned the move as politically motivated, calling it an “unjust decision” citing Lee’s role in creating jobs and developing infrastructure.

The announcement by the U.S. Treasury Department on September 12 follows reports of serious human rights abuses at Reese’s Osmah Resort, where trafficked workers were forced to run cryptocurrency scams.

The Treasury Department cited a 2023 FBI report that found a 53% increase in cryptocurrency investment fraud, many of which involved human trafficking workers running digital fraud schemes.

U.S. officials allege that Lee’s business was part of a scheme that lured individuals into fraudulent businesses under false pretenses and subjected them to poor working conditions.

The Treasury Department also cited the U.S. State Department’s annual Trafficking in Persons Report to draw attention to human trafficking and exploitation, with a particular focus on widespread human rights abuses in Cambodia.

However, Cambodia’s Foreign Ministry criticized the reliance on the US Trafficking in Persons Report, arguing that it provides an incomplete picture of Cambodia’s efforts to combat human trafficking. They stressed that Cambodia continues to work with international partners, including the US, to address forced labor and cross-border cryptocurrency crimes.

Last week, Asia Express magazine reported on the rise of “pig slaughter” scams, where scammers lure victims into fake romantic relationships to gain their trust and ultimately steal their cryptocurrency by promoting investments in fake cryptocurrency projects or requesting cryptocurrency payment transfers.

Southeast Asia is becoming a hub for the pig slaughtering ring, with even kidnapped and trafficked minors being forced to work as con artists.

Cambodia is gaining attention as a country of interest after Huione Pay, owned by Cambodian forex company Huione Group, emerged as a hotbed of cryptocurrency laundering.

Binance and WazirX’s feud goes public

Cryptocurrency exchange Binance has refuted claims by WazirX CEO Nischal Shetty and his legal team that Binance controls the majority of the revenue of WazirX parent company Jetai, limiting its ability to compensate users affected by the massive cyberattack that occurred in July.

In a town hall streamed on September 16, Shetty claimed that WazirX was sold in 2019.

Although Shetty did not mention Binance by name, it was clear to those in attendance that the world’s largest exchange was the opposing party in the dispute.

Additionally, the legal team’s slides presented at the town hall mentioned Binance as a party to the dispute.

“Your platform was hacked on July 18th. What was the revenue generated from your platform on July 17th? Who received that revenue? You, Zettai, or Binance?” asked one of the town hall attendees.

“No, it’s not Jettai,” Shetty replied.

Binance has strongly denied these claims and has repeatedly stated that it has never acquired or controlled WazirX.

“The WazirX team and Nischal Shetty continue to mislead WazirX customers and the market regarding the relationship between WazirX and Binance. Binance did not own, control, or operate WazirX at any time, including prior to, during, or after the July 2024 attack,” Binance said in a blog post.

According to Binance, the trade was proposed but never ultimately concluded due to Jetai failing to fulfill its contractual obligations.

On July 18, hackers stole more than $230 million from Indian cryptocurrency exchange WazirX, the second-largest cryptocurrency hack so far in 2024.

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Yoon Yohan

Yohan Yoon is a multimedia journalist covering blockchain since 2017. He has contributed as an editor to Forkast, a cryptocurrency media outlet, and has covered Asian technology stories as an assistant reporter for Bloomberg BNA and Forbes. In his free time, he enjoys cooking and experimenting with new recipes.