The Chinese police arrested 63 people, in the Mongolian city of Tonglio, for being allegedly involved in a money laundering scheme that netted a whopping 1.7 billion in cryptocurrency using the Tether stablecoin.
The investigation, as per an official statement, began when there was an abrupt spike in deposits totaling over 10 million yuan in a local bank. This triggered the bank’s anti-money laundering protocols. There were a series of raids. As such, the Chinese authorities confiscated around $18.6 million.
The criminal group had been set up on Telegram. It recruited members who would open crypto exchange accounts. They would then reward the members with a commission which was based on how much they could launder – converting USDT to the Chinese yuan. Its believed that this group established its illegal operation in May 2021. But then there was a sweeping crackdown by the Chinese government on the cryptocurrency industry with bans, fines, and jail sentences if found guilty. Mongolia shut down crypto mining farms. As such, many mining companies relocated to Kazakhstan and the United States.
But some crypto operations continue in China via proxy servers and virtual private networks (VPNs). With time, the underground miners have grown confident and are somewhat content with the protection offered by local proxy services.