Chinese Courts Sentences Operators for $428 Million USDT Gambling Network

Chinese Courts Sentences Operators for $428 Million USDT Gambling Network

Five operators of the Sifang payment platform have been sentenced to prison terms ranging from three to six years after being found guilty of facilitating a significant gambling network that processed more than 2.95 billion yuan, approximately $428 million, primarily using USDT, bank cards, and third-party payment accounts.

Details of the Sentences

According to reports from The Paper, the Intermediate People’s Court of Xilin Gol League in Inner Mongolia has upheld the conviction of one operator, Ma, imposing a prison term of four and a half years along with a 3 million yuan fine. As part of the legal proceedings, authorities are also tasked with recovering 2.95 million yuan identified as illegal earnings associated with Ma. The legal actions against these individuals began due to their roles in providing payment channels to online gambling businesses.

Operational Tactics

The illegal payments were processed between May 24, 2022, and October 18, 2023, using 105 merchant accounts connected to 10 third-party payment companies. Investigators traced these transactions through Tether wallet data and records from OKX, a cryptocurrency exchange. Different defendants received various prison sentences, with Zhu being sentenced to five years and an 800,000 yuan fine, while Zhang faced six years in prison along with an 850,000 yuan penalty.

Establishment of the Network

The operation was initiated in May 2022 when the group realized they could earn significant profits by providing payment services to gambling platforms. They employed a sophisticated strategy, including renting servers outside China and establishing connections with operators of overseas gambling sites. By functioning as an unlicensed fourth-party payment service, Sifang aggregated different payment systems for these businesses.

Legal Complications and Future Implications

Despite the court’s ruling, challenges persist in linking cryptocurrency transactions to identifiable individuals due to the decentralized nature of blockchain technology. Legal scholars are advocating for clearer regulatory frameworks regarding crypto-related money laundering to address the growing complexities of such cases.