Chinese authorities crack down on USDT 54.8 million 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 Tether (USDT) cryptocurrency. The operation led to the arrest of 21 suspects, the seizure of more than 40 mobile phones, and the confiscation of cash and USDT worth more than 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. Subsequent investigations revealed that it was a case of fraud related to the use of USDT for money laundering.

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

Upon questioning, all 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 them at higher prices through WeChat groups and execution point platforms. This scheme helped cybercriminals make payments between USDT and Yuan, generating illegal profit. The criminal group helped cybercriminals settle payments of more than 54.8 million USDT, equivalent to about 380 million yuan.

So-called “execution points” are a money laundering method that involves using 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.

So far, the 21 suspects in the case have been subjected to criminal enforcement measures in accordance with the law, and the case is still under investigation.

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

These cases highlight the growing concern about 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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