A recent ruling by a court in Tongliang, near Chongqing, China, has exposed a sophisticated fraud scheme. The proceedings ended with 21 individuals sentenced for their roles. They were involved in transferring proceeds from online fraud and illegal casinos. These funds were denominated in Tether (USDT) and amounted to a staggering 2.25 billion RMB, equivalent to $307 million.
The fraudulent activity centered around converting Tether, a popular digital currency, into Chinese Yuan (RMB). The individuals employed a decentralized wallet named Bitpie, which functions similarly to Metamask. Using this tool, they moved the USDT to local P2P exchanges situated on various virtual currency platforms. Their aim was to convert the digital currency into fiat.
To withdraw the money in different cities across the country, they concocted elaborate ruses. They presented the transactions as project payments and workers’ wages when questioned about their nature. Despite their efforts to mask their activities, the court managed to unravel their complex scheme.
Sentencing and aftermath
The court’s documents shed light on the primary culprits behind this grand scheme. Two defendants, identified by their surnames Jiang and Zheng, took on the roles of recruiters. They brought in 19 other individuals to act as money mules, facilitating their illicit operations. Jiang, in particular, reaped significant profits from this operation, amounting to 22.62 million RMB, equivalent to $3 million.
Following a thorough investigation, the court found the entire group guilty. They were charged with disguising and concealing criminal proceeds. The sentencing varied among the individuals, with prison terms and fines imposed as penalties. Jiang received a six-year, three-month prison sentence, along with a fine of 500,000 RMB. Zheng faced a similar fate, with a six-year prison sentence and an identical fine.
The court documents did not provide explicit details regarding the origins of the USDT involved in this case. However, Tether is widely recognized as a digital asset favored by fraud rings in Southeast Asia. Bloomberg journalist Zeke Faux explores this trend in his latest book, “Number Go Up.” He delved into the mechanisms powering these gangs, highlighting the role of Tether in their operations.