May 17, 2024
By Sharan Kaur Phillora
Chinese authorities have cracked down on an underground banking scheme, arresting suspects in Sichuan province on May 15 for allegedly facilitating illegal foreign exchange transactions worth around $2 billion using Tether’s USDT stablecoin.
Here’s what we know:
According to Baijiahao.baidu, the Sichuan police’s operation targeted a vast network that spanned 26 provinces, municipalities, and autonomous regions. This major bust disrupted smuggling activities valued at 13.8 billion Chinese yuan (approximately $1.9 billion). Over 90 individuals were apprehended in connection with the scheme, which leveraged USDT to evade national foreign exchange regulations and provide illegal settlement channels.
This incident follows a notable arrest by the U.S. Department of Justice (DoJ) involving Maximilien de Hoop Cartier. Hoop Cartier was charged with collaborating with a Colombian drug cartel to smuggle 100 kilos of cocaine and launder hundreds of millions of dollars, primarily through over-the-counter (OTC) USDT trades.
The UN Office on Drugs and Crime has identified USDT as a significant tool for money launderers and fraudsters. In a recent interview on the World Class podcast, Ripple CEO Brad Garlinghouse suggested that the U.S. government might be targeting Tether, hinting at potential regulatory consequences for the company.
Tether CEO Paolo Ardoino responded strongly, dismissing Garlinghouse’s comments and emphasizing Tether’s active collaboration with global law enforcement. Ardoino highlighted that Tether has partnered with 24 agencies in over 40 countries, blocking wallets linked to illicit activities based on 198 requests last year alone.
Despite these proactive measures, the scrutiny on Tether is intensifying. On May 14, Tether froze $5.2 million worth of USDT associated with phishing scams and announced a partnership with Chainalysis to enhance monitoring and analysis capabilities.
As regulatory pressure mounts, Tether’s role in the cryptocurrency market and its efforts to combat illicit activities will remain under the microscope.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.
