Chinese Tether laundromat, Bhutan enjoys recent Bitcoin boost: Asia Express
2024.09.19 19:56
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Our weekly roundup of news from Asia curates the industry’s most important developments.
Dirty Tether laundry service
A Chinese court in the northwestern Gansu province has reportedly sentenced ten individuals involved in a Tether (USDT) laundering service scheme.
The defendants received prison sentences ranging from 10 months to one year, with authorities recovering over $168,000 (1.2 million yuan) in illicit gains, according to state-owned online news outlet The Paper.
The scheme, led by a man identified as Shen, operated a USDT trading studio that laundered crypto profits tied to online gambling and telecom scams.
China’s Tether trading studio turns out to be a crypto laundromat. (Bianca Jordan)
It is alleged that Shen and his accomplices were aware that the cryptocurrency came from illegal activities. They profited by converting the illicit crypto into fiat currency at high exchange rates.
According to court documents cited by The Paper, Shen set up the operation in early 2022, recruiting several associates to help run the illegal cryptocurrency transactions. Together, they rented properties and equipped them with the necessary tools — computers, software, and devices — to carry out the laundering business.
They then formed a trading group on Telegram, a popular messaging platform, where they conducted over-the-counter (OTC) deals in USDT — purchasing USDT at a discount from criminals involved in telecom fraud and selling it at a higher rate to other customers.
The court found that the group earned over $124,000 (880,000 yuan) through these operations. However, their laundering business is estimated to have facilitated the theft of over $834,000 (5.9 million yuan) from victims.
The case is a reminder of China’s continued hard stance toward crypto.
Despite recent rumors suggesting China might lift its ban on crypto trading in the fourth quarter of 2024, Chinese authorities have yet to indicate any such possibility.
In August, the Supreme People’s Court — the highest court in China — revised the nation’s money laundering law to include virtual assets for the first time.
In July, Beijing held its third plenary session, a meeting of senior Communist Party officials. The meeting placed a renewed focus on the international promotion of its central bank digital currency, which it considers the sole legal digital tender. All other digital currencies, including Bitcoin, remain illegal for payments.
Bhutan’s Bitcoin investment grows by $70 million since identified by Arkham
The small landlocked Kingdom of Bhutan may be pleased to see its Bitcoin holdings have just reached over $830 million after a small rally in the price of Bitcoin this week.
Bhutan has been identified as the fourth largest government holder of Bitcoin, per Arkham Intelligence on Sept. 16.
Bhutan’s crypto holdings debut to the public as the fourth-largest government portfolio. (Arkham)
When it was first reported, the South Asian nation’s Bitcoin holdings were valued at approximately $758 million.
With Bitcoin’s price surge past $63,000 on Sept. 19, Bhutan’s investment grew as well.
As of Sept. 19, Arkham data shows that the Royal Government of Bhutan holds 13,058 BTC worth around $832.7 million.
Additionally, the government owns $1.6 million in Ether.
Despite being a small landlocked nation with fewer than 800,000 people in the Eastern Himalayas, Bhutan’s Bitcoin holdings are estimated to be more than double the size of El Salvador’s, a country often spotlighted for its Bitcoin adoption.
While El Salvador’s Bitcoin strategy has attracted global attention, Bhutan’s stash has quietly grown via mining operations through its sovereign wealth fund, Druk Holding and Investments. Arkham states that many other governments with significant Bitcoin bags obtain them through law enforcement asset seizures.
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Cambodia claps back at US sanctions on senator over alleged crypto scam ties
Cambodia’s government has pushed back against US sanctions targeting senator and businessman Ly Yong Phat, who faces accusations of facilitating forced labor in online scam operations involving cryptocurrency.
Cambodia condemned the move as politically motivated, calling it an “unjust decision,” citing Ly’s role in job creation and infrastructure development.
Cambodia’s response to US sanction. (Ministry of Foreign Affairs)
The US Treasury’s announcement on Sept. 12 follows reports of serious human rights abuse accusations at Ly’s O-Smach Resort, where trafficked workers were allegedly forced to run crypto scams.
The Treasury cited a 2023 report from the Federal Bureau of Investigation that found a 53% increase in cryptocurrency investment scams, many of which are linked to trafficked workers running digital fraud schemes.
US officials claim that Ly’s businesses were part of a network luring individuals into scam operations under false employment pretenses, subjecting them to abusive working conditions.
The Treasury also referenced the US Department of State’s annual Trafficking in Persons Report, shedding light on human trafficking and exploitation, with a focus on widespread abuses in Cambodia.
However, Cambodia’s Ministry of Foreign Affairs criticized the reliance on the US Trafficking in Persons Report, arguing it presents an incomplete picture of the country’s efforts to combat human trafficking. They highlighted Cambodia’s ongoing collaboration with international partners, including the US, to address forced labor and cross-border crypto crime.
In last week’s Asia Express, Magazine reported on the rise of “pig butchering” scams, where swindlers lure victims into fake romantic relationships to gain their trust, ultimately stealing their crypto through means like promoting investments in phony crypto projects or asking for crypto payment transfers.
Southeast Asia is becoming an epicenter for pig butchering syndicates, with even kidnapped and trafficked minors forced to work as scam operators.
Cambodia has been highlighted as a nation of interest, partly due to the rise of Huione Pay, a Cambodian foreign exchange business owned by the Huione Group conglomerate, allegedly emerging as a crypto laundering hot zone.
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Binance and WazirX feud becomes public
Crypto exchange Binance has hosed back claims from WazirX CEO Nischal Shetty and his legal team, suggesting that Binance controlled the majority of WazirX parent firm Zettai’s profits, limiting their ability to compensate users affected by the massive July cyberattack.
During a townhall streamed on Sept. 16, Shetty claimed that WazirX had been sold in 2019.
Though Shetty did not utter Binance’s name, it was clear among attendees that the opposing party of the dispute was the world’s largest exchange.
Binance was also referenced in a slide presented by the legal team in the town hall as the party behind the dispute.
A snapshot of WazirX’s presentation during the Sept. 16 town hall. (WazirX)
“Your platform was hacked on July 18. On July 17th, whatever profits were happening on your platform, who was receiving those profits? Was it you, Zettai, or Binance?” one town hall attendee asked.
“Not Zettai,” Shetty answered.
Binance firmly denied these allegations in response, reiterating that it never acquired or controlled WazirX.
“The WazirX team and Nischal Shetty continue to mislead WazirX customers and the market regarding the relationship between WazirX and Binance. Binance has not owned, controlled, or operated WazirX at any time, including before, during, or after the July 2024 attack,” Binance said in a blog post.
According to Binance, a deal was proposed but never finalized due to Zettai’s failure to meet its contractual obligations.
On July 18, a hackerstole over $230 million from WazirX, an Indian cryptocurrency exchange, in the second-largest cryptocurrency hack of 2024 so far.
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Yohan Yun
Yohan Yun is a multimedia journalist covering blockchain since 2017. He has contributed to crypto media outlet Forkast as an editor and has covered Asian tech stories as an assistant reporter for Bloomberg BNA and Forbes. He spends his free time cooking, and experimenting with new recipes.
