Tether’s USDT has been implicated in a massive illegal foreign exchange scheme in China, involving approximately $2 billion. Chinese police in Sichuan province apprehended several suspects on May 15 for their alleged involvement in facilitating illicit foreign exchange transactions using Tether’s USDT to evade national supervision. The operation led to the shutdown of a major underground banking scheme that was responsible for smuggling operations worth 13.8 billion Chinese yuan. The scheme spanned across 26 provinces in China, and over 90 suspects have been arrested in connection with it.
Stablecoins like USDT are often exploited for bypassing foreign exchange supervision due to their price stability and the anonymity provided by cryptocurrencies. This recent arrest follows a similar incident involving Maximilien de Hoop Cartier, an heir of Cartier, who was arrested by the US Department of Justice for allegedly collaborating with a Colombian drug cartel to import cocaine and launder money through USDT stablecoin trades.
The use of USDT for money laundering has been highlighted by the United Nations Office on Drugs and Crime, and Ripple CEO Brad Garlinghouse has suggested that the US government is specifically targeting Tether. However, Tether CEO Paolo Ardoino has strongly refuted these claims, labeling Garlinghouse as an “uninformed CEO” and emphasizing Tether’s collaboration with law enforcement agencies worldwide to combat illicit activities. Ardoino revealed that Tether has partnered with 24 agencies in over 40 countries and has successfully responded to numerous requests to block wallets associated with illicit activities.
Despite these developments, the anticipated regulatory scrutiny of Tether by the US government may be unfounded. Tether has taken proactive measures, such as freezing $5.2 million worth of USDT associated with phishing scams, and has partnered with Chainalysis to develop tools for monitoring and analyzing wallets linked to illicit or sanctioned addresses.