Guangdong police cracked the country's first USDT money laundering case. What is the impact on USDT holders?

Wu Blockchain learned that according to media reports on October 23, on June 8, under the guidance and support of the Guangdong Provincial Public Security Department, the Huizhou Municipal Public Security Bureau successfully cracked down on a cross-border online gambling and illegal criminal gang that used the USDT running point platform for illegal operations.

In the operation, 77 suspects including Wu Mouping (male, from Huizhou City) and Zeng Moupei (male, from Huizhou City) were arrested, 3 online gambling websites were destroyed, 5 studios involved in the case were destroyed, including 3 cross-border online gambling studios and 2 website order-swiping money laundering studios, and a batch of documentary evidence and physical evidence such as bank cards, mobile phones, computers, vehicles, and documents and account books involved in the case were seized. 30 people were criminally detained and 17 people were arrested. This case is the first case in China to use USDT digital currency to operate a fourth-party payment platform.

The criminal gang headed by Wu Mouping established three gambling websites, including "HengX VIP Club", "Russian Entertainment City" and "Italy VIP Club", by purchasing overseas servers, and set up gambling projects such as baccarat, lottery, instant lottery and Beijing racing. The members of the gang had clear division of labor. The online gambling studio was responsible for promoting gambling websites and recruiting gamblers, while the website order-washing and money-laundering studio was responsible for using the USDT (Chinese name is Tether) digital currency running point platform to provide illegal payment and settlement services for overseas online gambling websites.

The main operation mode of the running point platform is: the runners go to the USDT running point platform to buy USDT as a margin and participate in the running point grabbing order. The runners provide the recharge code for purchasing USDT coins to the running point platform. The running point platform gathers USDT recharge codes of various recharge amounts, integrates them into a USDT recharge code pool, and provides them to the gambling platform in the form of a recharge interface. Gamblers need to scan the USDT recharge code to recharge their gambling funds, that is, use RMB to purchase USDT from the running point platform, which ultimately causes RMB to flow to the running point platform. Through running points, a large amount of stolen money from the online gambling platform can be operated in batches and quantities through these private accounts, and the stolen money can eventually be "laundered".

After investigation, it was found that there were more than 3,000 "runners" across the country. The platform operated for nearly 15 months and provided fund settlement services for 120 overseas gambling websites and 70 investment fraud platforms, involving a total amount of 120 million yuan.

Reference: Guangdong police seized the first virtual currency OTC money laundering gang that forged Huobi website fraud

Previously, Wu said blockchain reported that the New York State Department of Financial Services (DFS) approved a list of 10 custodial cryptocurrencies and 8 listed cryptocurrencies. The list includes three US dollar stablecoins, namely BUSD, GUSD and PAX, but does not include the most mainstream stablecoins USDT and USDC. Before the New York Department of Financial Services released the whitelist, USDT issuers Bitfinex and Tether were facing multiple lawsuits. The US Attorney General believed that Bitfinex had misappropriated a large amount of documents and USDT from customers and company funds.

Since the beginning of this year, many gambling platforms have started to use USDT payment, which will increase regulatory risks dramatically. For Tether, the core risk still comes from US regulators. For Chinese USDT users, USDT is just an accessory to the regulators' crackdown on telecommunications fraud and money laundering. It is unlikely to specifically target USDT, but the regulatory crackdown on OTC merchants/exchanges will be more severe. The previous Zhao Dong and Xu Mingxing incidents were very likely to involve corresponding money laundering cases.

At present, the exchange rate of USDT to CNY on OKEx has dropped to around 5 yuan, and the selling price of USDT on Huobi is often higher than the buying price, and the freezing of USDT is an endless stream. However, regulatory investigations are mainly based on legal currency, so choosing other stablecoins or even using BTC for deposits and withdrawals cannot avoid the problem of money laundering. For ordinary Chinese USDT holders, as long as they do not participate in illegal activities such as running points, there will be no additional risks in the short term.