Our weekly newsletter from Asia picks up the most important industry developments.
Dirty Tether Money Laundering Service
A court in China’s northwestern Gansu province has sentenced ten individuals involved in a Tether (USDT) money laundering scheme.
The defendants were sentenced to between 10 months and a year in prison, and authorities recovered more than $168,000 (1.2 million yuan) in illegal profits, according to state-run news site The Paper .
The scheme was headed by a man named Shen, who ran a USDT trading room that laundered profits from cryptocurrencies linked to online gambling and telecommunications fraud.
Shen and his co-defendants allegedly knew that the cryptocurrency came from illegal activities. They profited by converting the illicit cryptocurrency into fiat currency at a high rate.
According to court documents cited by The Paper, Shen set up the operation in early 2022, recruiting several people to help run these illegal cryptocurrency transactions. They rented real estate and equipped it with the necessary tools — computers, software, and equipment — to conduct the money laundering operation.
They then set up a trading group on Telegram, a popular messaging platform, where they conducted over-the-counter (OTC) trades using USDT — buying USDT at a discount from telecom criminals and selling it at a higher price to other customers.
The court determined that the group had earned over $124,000 (880,000 yuan) from these activities. However, their money 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 tough stance on cryptocurrencies.
Despite recent rumors that China could lift its ban on cryptocurrency trading in the fourth quarter of 2024, Chinese authorities have yet to indicate any such possibility.
In August, the Supreme People's Court — China's highest judicial body — amended the country'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 focused on promoting the central bank’s digital coin internationally, which is XEM the only legal digital currency. All other digital currencies, including Bitcoin, are illegal for payment.
Bhutan’s Bitcoin Investments Rise by $70 Million Since Arkham Identified
The tiny, landlocked kingdom of Bhutan can rejoice as its current Bitcoin holdings have surpassed $830 million following a small surge in Bitcoin prices this week.
According to Arkham Intelligence on September 16, Bhutan was identified as the 4th largest government holding Bitcoin.
When this information was first reported, the South Asian country's Bitcoin holdings were valued at around $758 million.
With Bitcoin's price surging past $63,000 on September 19, Bhutan's investment has also increased.
According to Arkham data on September 19, the Royal Bhutanese government holds 13,058 BTC worth approximately $832.7 million.
Additionally, the government owns $1.6 million in Ether.
Despite being a small landlocked country with a population of less than 800,000, Bhutan's Bitcoin holdings are estimated to be double that of El Salvador, a country often noted for its Bitcoin adoption.
While El Salvador’s Bitcoin strategy has attracted global attention, Bhutan’s Bitcoin holdings have been quietly growing through mining operations by its sovereign wealth fund Druk Holding and Investments. Arkham said many other governments with large Bitcoin holdings have obtained the assets through asset seizures during legal investigations.
Cambodia protests US sanctions on senator over links to cryptocurrency scams
The Cambodian government has protested against US sanctions against senator and businessman Ly Yong Phat, who was accused of being involved in forced labor in an online cryptocurrency scam.
Cambodia condemned the move as politically motivated, calling it an “unfair decision”, citing Ly’s Vai in creating jobs and developing infrastructure.
The US Treasury Department’s announcement on September 12 followed reports of serious allegations of human rights abuses at Ly’s O-Smach resort, where trafficked workers were forced to carry out cryptocurrency scams.
The Treasury Department relied on a 2023 report from the Federal Bureau of Investigation (FBI) that showed a 53% increase in cryptocurrency investment scams, many of which involved trafficked workers engaging in digital fraud.
US officials allege that Ly's businesses were part of a network that tricked people into participating in fraudulent activities under the pretext of fake recruitment, forcing them to work in harsh working conditions.
The Treasury Department also referenced the US State Department's annual report ontrafficking in persons , which highlights human trafficking and abuses, focusing on widespread violations in Cambodia.
However, Cambodia’s Ministry of Foreign Affairs criticized the reliance on the US Trafficking in Persons report, saying it provided an incomplete picture of the country’s efforts to combat human trafficking. They highlighted Cambodia’s ongoing cooperation with international partners, including the US, to address forced labor and cross-border cryptocurrency crime.
In its Asia Express column last week, the magazine reported on the rise of “pig butchering” scams, where scammers lure victims into fake romantic relationships to gain their trust, eventually robbing them of their cryptocurrency through measures such as encouraging investments in fake cryptocurrency projects or requesting payment transfers in cryptocurrency.
Southeast Asia is becoming a hub for pig slaughter scams, with kidnapped and trafficked children forced to work as scam operators.
Cambodia has been highlighted as a key country, in part due to the rise of Huione Pay, a Cambodian foreign exchange business owned by the Huione Group conglomerate, which is said to be becoming a hot spot for Cryptocurrency Money Laundering .
Binance vs. WazirX Dispute Explodes Publicly
Cryptocurrency exchange Binance has strongly disputed claims from WazirX CEO Nischal Shetty and his legal team, alleging that Binance controls the majority of the profits of WazirX’s parent company Zettai, limiting its ability to compensate users affected by a major cyberattack in July.
In a streamed townhall on September 16, Shetty asserted that WazirX was sold in 2019.
Although Binance was not mentioned by name directly, it was clear among attendees that the opponent in the debate was the world's largest exchange.
Binance was also mentioned in a slide presentation by the legal team during the townhall as the party behind the dispute.
“Your platform was hacked on July 18. On July 17, who gets the profits that happen on your platform? Is it you, Zettai, or Binance?” one attendee asked.
“Not Zettai,” Shetty replied.
Binance strongly denied these allegations in a response, reiterating that it has never acquired or taken control of WazirX.
“The WazirX team and Nischal Shetty continue to mislead WazirX customers and the market about the relationship between WazirX and Binance. Binance did not own, control, or operate 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 failing to fulfill its contractual obligations.
On July 18, a hacker stole more than $230 million from WazirX, an Indian cryptocurrency exchange, in the second-largest cryptocurrency hack of 2024 so far.
