# Police in Sichuan Busts $2 Billion USDT Underground Financial Organization
The Chinese police authorities in Sichuan seem to have intensified their crackdown on underground banking networks, particularly focusing on transactions in USDT totaling billions of US dollars. What does this crackdown mean for the Chinese economy?
## A clandestine banking network discovered in China
The pervasive nature of digital finance in China recently took a sinister turn. Authorities in the province of Sichuan uncovered an extensive network of underground banks, with operations involving the use of the stablecoin Tether (USDT). These illicit practices aimed to evade national scrutiny on currency exchanges and facilitate illegal foreign exchange transactions, involving nearly $2 billion in USDT.
## The role of Tether in evading controls
According to several reports, suspects allegedly used this stablecoin to bypass national regulations on currency exchanges and provide illicit settlement channels. “This strategy spread to 26 provinces in China, leading to over 190 arrests nationwide,” authorities highlighted. Among the dismantled units were two underground bank centers in Fujian and Hunan.
## The flip side of the digital coin
Interestingly, while Sichuan province previously played a key role in the cryptocurrency industry due to its cheap hydroelectricity-generated electricity, the landscape quickly changed following Beijing’s ban on all cryptocurrency mining and trading operations.
By the end of 2023, the People’s Supreme Court and the State Administration of Foreign Exchange pointed out criminal cases involving stablecoins, noting that “these digital currencies backed by traditional currencies had become a popular intermediary for illegal trading of the yuan with other currencies.”
These revelations shed light on governments’ challenging battle to regulate these new forms of currencies, illustrating how the financial world can be a veritable digital minefield.