Chinese Police Bust Illegal Crypto Ring Worth Nearly $2 Billion - Latest Global News

Chinese Police Bust Illegal Crypto Ring Worth Nearly $2 Billion

Recently, Chinese police in the city of Chengdu uncovered a massive illegal banking crime involving the popular stablecoin Tether (USDT). The value of the illegal operation, which facilitated the exchange of foreign currencies, is estimated at around $1.9 billion.

The news comes just days after reports that Chinese authorities shut down another very similar operation that facilitated illegal currency exchanges between the Chinese Yuan and the South Korean Won using cryptocurrencies as a medium.

According to a media report from Chengdu Metropolitan Police, 193 suspects were arrested in 26 provinces in connection with the underground banking operation. Authorities also successfully dismantled two related operations in Fujian and Hunan provinces. In addition, police have frozen 149 million yuan (approximately $20 million) related to the illegal USDT banking activities.

Circumventing the Chinese Crypto Ban

The underground banking operation reportedly began in January 2021 and was primarily used to smuggle medicines, cosmetics and fixed assets abroad. Despite China’s comprehensive ban on crypto-related activities, Chinese traders continue to find ways to circumvent the ban and use crypto assets in alternative ways.

A report from Kyros Ventures shows that Chinese traders are among the largest stablecoin holders in the world: 33.3% of Chinese investors hold multiple stablecoins, second only to Vietnam at 58.6%.

In recent years, the Chinese government has issued a series of bans on cryptocurrency use, exchanges, and Bitcoin mining operations. However, the local population has repeatedly found ways to circumvent these restrictions.

After the Bitcoin mining ban, China’s contribution to the Bitcoin network’s hash rate initially declined, but surprisingly, despite the ban, it rose to second place within a year. After the country banned centralized exchanges, Chinese traders shifted their focus to decentralized exchanges and significantly increased the use of decentralized finance-based protocols. Some traders have even resorted to virtual private networks to defy the ban.

Although Chinese authorities are largely hostile to cryptocurrencies, there are still some local developments taking place in the industry. Hong Kong fund managers applied for approval for spot Bitcoin and Ethereum ETFs in mid-April, only to see them approved just days later. Earlier this month, both products became available on the local exchange.

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