On July 18, 2023, Chinese officials in Qingshui County, Jincheng City, Shanxi Province successfully solved a money laundering case employing the cryptocurrency Tether (USDT). The operation resulted in the arrest of 21 people, the seizure of over 40 mobile phones, and the confiscation of cash and USDT valued over 1 million yuan.
The inquiry began on April 1, 2023, when local authorities discovered unusual fund transfers in a bank account belonging to a citizen of Longgang Town, Qingshui County. The account holder, identified as Zhao, was accused of participating in a “running points” money laundering scheme. Further research revealed that this was a fraud case involving the usage of USDT for money laundering.
The case comprised a sophisticated network of individuals from four provinces and six cities, including Guangxi, Jiangxi, Henan, and Anhui. In response, Qingshui police gathered a team of more than 50 officers, organising three arrest squads to carry out operations in various areas. Police operations resulted in the effective arrest of all 21 suspects involved in the case, as well as the confiscation of cash and USDT totaling over 1 million yuan.
During interrogation, the 21 suspects admitted to utilising USDT to launder money for cybercriminals. The investigation discovered that, since October 2021, a person named Zhou had been organising off-market USDT trading groups, buying USDT at low prices and selling it at higher rates using WeChat groups and running points sites.
This technique aided cybercriminals in carrying out payment settlements between USDT and yuan, resulting in unlawful earnings. The criminal organisation assisted cybercriminals in settling payments totaling more than 54.8 million USDT, or around 380 million yuan. The so-called “running points” method of money laundering is using one’s 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 predetermined account, earning commissions in the process.
Due to its convenience and secrecy, USDT, a blockchain-based cryptocurrency issued by a foreign corporation, has become the favoured alternative for running points platforms. As of now, all 21 suspects in the case have been subjected to criminal coercive measures in accordance with the law, and the case is still ongoing.
Money laundering with cryptos and stablecoins like USDT is not uncommon. In December 2022, the Public Security Bureau of Tongliao City in Inner Mongolia successfully dismantled a huge criminal organisation that exploited blockchain technology to exchange cryptocurrencies and launder money with USDT. The operation resulted in the arrest of 63 people, the destruction of over ten money laundering and “running points” dens, and the confiscation of unlawful proceeds totaling over 130 million yuan
This organisation laundered a whopping 12 billion yuan in total. These examples show the growing worry about the usage of cryptocurrency for illegal purposes. Despite the potential benefits of blockchain technology and cryptocurrencies, their anonymity and lack of regulation make them appealing instruments for money laundering and other illegal activities.