China's central bank says it helped crack down on gambling websites that used USDT to launder funds

Quick Take

  • The People’s Bank of China has assisted law enforcement in cracking down online cross-border gambling activities
  • The central bank said some recent cases involved the use of USDT to launder money.
  • The cases point to a broader probe in the past months that led to crypto traders’ bank accounts being frozen

The People's Bank of China (PBoC) said it has cracked down on illegal online gambling activities that involve the use of cryptocurrencies for cross-border capital flow.

The central bank published a blog post on WeChat Thursday that detailed its recent efforts in assisting law enforcement to quash online gambling businesses.

These sites are typically set up via overseas servers and adopt various ways to let domestic users bypass China's capital control and wire money overseas, the central bank said.

In one recent case, the PBoC's branch in the city of Huizhou in Guangdong province helped local police crack down three gambling sites and arrested 77 suspects who used USDT in cross-border transactions to launder their proceeds — worth nearly 120 million yuan, or $18 million, according to the post.

"The case not only involves bank transfers but also virtual currencies and has been 'laundered' through multiple layers so the capital flow was extremely elusive," the blog post said.

These cases represent a much wider probe in recent months by Chinese authorities over illegal economic activities that apparently led to many Chinese crypto over-the-counter traders' bank accounts being frozen by law enforcement.

This past summer, some crypto OTC traders started to post on social media about bank account freezes due to the funds they received being connected to activities such as Ponzi schemes, online gambling and telecommunication frauds.

It was reported at the time that such actions were taken by police in China's Guangdong province and that the scale could impact several thousand people. 

The situation has escalated since then, with crypto OTC traders being taken into custody by police to assist money laundering investigations, with the contention being that their OTC desks might have facilitated fiat-to-crypto transactions for illegal activities. 

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