It is in Sichuan Province, China. On May 15, Chinese police in Sichuan province arrested several people involved in an illegal banking plan involving Tether’s USDT worth about $2 billion. This is a story from Baijiahao. Baidu says the suspects used USDT to get around China’s strict foreign exchange rules while offering illegal payment methods.
As part of a major crackdown on illegal foreign exchange activities, the operation broke up a network that smuggled 13.8 billion Chinese yuan, about $1.9 billion. This large-scale scheme, involving 26 provinces, municipalities, and autonomous areas in China, caught over 90 suspects.
People who want to avoid foreign exchange controls like stablecoins like USDT because their prices stay stable and cryptocurrency transactions are mostly anonymous. Because of these factors, stablecoins are great for sending and keeping money without the risk of other cryptocurrencies.
Tether’s USDT Linked to High-Profile Drug and Money Laundering Case
The arrests in Sichuan happened right after another high-profile case involving USDT. Maximilien de Hoop Cartier, the heir to the Cartier fortune, was recently charged by the US Department of Justice (DoJ) with working with a Colombian drug gang to hide 100 kg of cocaine and wash hundreds of millions of dollars, mostly through over-the-counter (OTC) USDT trades.
More and more people are using USDT for illegal actions, which makes people wonder when Tether’s stablecoin will be regulated. The UN Office on Drugs and Crime has said before that USDT is a tool that scammers and people who launder money like to use. Brad Garlinghouse, CEO of Ripple, recently said that he thought the US government might soon look into Exchange because of how important the stablecoin is to the cryptocurrency market.
Tether CEO Paolo Ardoino had harsh words for Garlinghouse’s views. He called Garlinghouse an “uninformed CEO.” Ardoino stressed that Exchange was ready to work with law officials worldwide to stop illegal activities. In answer to 198 requests in the last year and 339 requests over the last three years, he said, Tether has worked with 24 agencies in more than 40 countries to block wallets.
Even with these promises, Tether is still being closely watched by regulators. This week, on May 14, Tether froze USDT worth $5.2 million connected to phishing scams. Tether has also teamed up with Chainalysis, a company that studies blockchains, to make tools for monitoring and finding wallets linked to illegal or legal activities.
What is happening now shows how hard it is for officials to stop people from abusing stablecoins like USDT. It remains to be seen whether these steps will be enough to stop more illegal uses of Tether’s USDT or lead to stricter rules. As governments worldwide continue to figure out how to regulate cryptocurrency and criminal behaviour, the future of stablecoin regulation is likely to change a lot.
