By Eric Vandenbroeck and co-workers
Cripto In China And Beyond
Chinese police have
unearthed a $1.9 billion underground banking racket involving the popular
stablecoin Tether.
The underground
banking operations operated in the Chinese city of Chengdu, where the Tether
USDT tickers down $1.00 stablecoin was used to exchange foreign currencies. The
city police issued a media report highlighting the details of the underground
operations and said they had arrested 193 suspects across 26 provinces.
The police report noted that the
underground USDT banking operations began in January 2021 and were primarily
used to smuggle medicine, cosmetics and investment assets overseas.
The authorities destroyed two underground operations
in Fujian and Hunan, and the police also froze 149 million yuan worth $20
million linked to the USDT banking operations.
Despite a
comprehensive prohibition on crypto-related activities in China, Chinese
traders persist in circumventing the national ban and utilizing crypto assets
in alternative ways.
A report published by Kyros Ventures
indicates that Chinese
traders are among the largest stablecoin holders worldwide. The report shows that 33.3% of Chinese
investors hold several stablecoins, ranking them second only to Vietnam’s
58.6%.
The Chinese government has banned the
use of cryptocurrency and cryptocurrency exchanges, along with Bitcoin BTC
tickers down $67,013 mining operations. However, the local population has found
ways to evade such a ban over the years.
At the time of the Bitcoin mining ban,
China was the largest contributor to the Bitcoin network hash rate.
However, within a year of the ban, Chinese mining hash rate contribution rose to second
place despite the
ban.
Similarly, after the
country banned centralized exchanges, Chinese traders turned to decentralized
exchanges.
In the wake of the ban, Chinese traders’ use of
decentralized finance-based protocols significantly spiked, while some defied
the ban using virtual private networks.
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