Chinese Authorities Crack Down on 54.8 Million USDT Money Laundering Scheme

On July 18, 2023, Chinese authorities in Qingshui County, Jincheng City, Shanxi Province successfully cracked a money laundering case involving the use of the cryptocurrency Tether (USDT). The operation led to the arrest of 21 suspects, the seizure of over 40 mobile phones, and the confiscation of cash and USDT worth over 1 million yuan.

The investigation began on April 1, 2023, when local police noticed abnormal fund flows in a bank account belonging to a resident of Longgang Town, Qingshui County. The account holder, identified as Zhao, was suspected of being involved in a “running points” money laundering scheme. Further investigation revealed that this was a case of fraud involving the use of USDT for money laundering.

The case spanned across four provinces and six cities, including Guangxi, Jiangxi, Henan, and Anhui, and involved a complex network of individuals. In response, Qingshui police assembled a team of over 50 officers, forming three arrest groups to carry out operations in various locations. The continuous efforts of the police led to the successful arrest of all 21 suspects involved in the case, and the seizure of cash and USDT worth over 1 million yuan.

Upon interrogation, the 21 suspects confessed to using USDT to launder money for cybercriminals. The investigation revealed that since October 2021, a person named Zhou had been organizing off-market USDT trading groups, buying USDT at low prices and selling it at higher prices through WeChat groups and running points platforms. This scheme helped cybercriminals carry out payment settlements between USDT and yuan, generating illegal profits. The criminal group helped cybercriminals settle payments of over 54.8 million USDT, equivalent to about 380 million yuan.

The so-called “running points” is a money laundering method that involves using one’s bank card, POS machine, WeChat or Alipay payment QR code, and cryptocurrency accounts to collect money on behalf of others and transfer it to a designated account, earning commissions in the process. USDT, a blockchain-based cryptocurrency issued by a foreign company, has become the preferred choice for running points platforms due to its convenience and anonymity.

As of now, all 21 suspects in the case have been subjected to criminal coercive measures according to the law, and the case is still under further investigation.

Money laundering using cryptos and stablecoins like USDT is not uncommon. In December 2022, the Public Security Bureau of Tongliao City in Inner Mongolia successfully dismantled a major criminal group that used blockchain technology to exchange cryptocurrencies and launder money with USDT. The operation resulted in the arrest of 63 suspects, the destruction of over 10 money laundering and “running points” dens, and the confiscation of illegal proceeds amounting to approximately 130 million yuan. The total amount laundered by this group reached a staggering 12 billion yuan.

These cases highlight the growing concern over the misuse of cryptocurrencies for illicit activities. Despite the potential benefits of blockchain technology and cryptocurrencies, their anonymity and lack of regulation make them attractive tools for money laundering and other criminal activities. 

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