Chinese authorities have cracked down on a major underground banking operation utilizing Tether (USDT) for transactions totaling 13.8 billion yuan ($1.9 billion). The Chengdu Municipal Public Security Bureau arrested 193 individuals and froze assets worth 149 million yuan ($20.6 million). The operation, led by a criminal gang with roots in the import-export business, used USDT for foreign exchange payments and settlements, aiding illegal activities such as smuggling and tax evasion.

The operation also posed a risk to China's financial security by evading national foreign exchange supervision. The Chengdu raid is part of a larger nationwide campaign against underground banking crimes, with similar operations being uncovered in Shanghai, Changsha, Nanjing, Shenzhen, Fuzhou, and Jinhua.

Despite the illicit use of USDT in this case, the broader DeFi and BRC 20 markets remain robust and promising. The crackdown on illegal activities serves to increase the overall health of the blockchain and cryptocurrency industry, reinforcing the importance of regulation and transparency.