China busts online gambling payment processor using Tether crypto token


China’s anti-online gambling campaign has disrupted an illegal ‘fourth-party’ payment processing operation based around the Tether cryptocurrency.

This week, Chinese media reported that the Public Security Bureau in Huizhou City in Guangdong province had arrested 76 suspects involved in a payment processing service funneling funds to and from 120 online gambling sites as well as some fraudulent investment platforms.

The payment platform, which had reportedly been in operation for 15 months before authorities pounced in June, represented a first in China’s long-running gambling payments crackdown in that it conducted transactions in the Tether (USDT) crypto token.

The Chinese platform recruited around 3,000 ‘runners’ to open accounts on the platform and deposit a sum of cash. The accounts would then be used as conduits for payments labeled as legitimate products, but allowed gamblers to make deposits to and withdrawals from gambling sites based outside China.

Gamblers who wanted to wager would place an order for a phantom product, the cost of which would be deducted from the runners’ accounts. The gamblers were then instructed to purchase USDT via bank cards or Alipay and then ‘recharge’ the runners’ accounts, while the runners would receive commissions based on the volume of USDT flowing through their particular account.

Tether is considered a ‘stablecoin’ in that it pegs its value to the US dollar, a ‘feature’ that has allowed the minting of billions of dollars’ worth of new tokens in tandem with the US Treasury’s demonstrated willingness to fire up its money printing presses. New York’s Attorney General is currently conducting a probe into suspected fraud involving Tether’s backers and the Bitfinex digital currency exchange.

China’s online gambling payment crackdown is forcing processors to get increasingly more creative. Chinese state-run media recently reported on a number of fake product websites going to extreme lengths to make it look as if a product has not only been purchased but also shipped, just in case the authorities became suspicious.

Some of these payment operators have the means to generate QR codes ‘proving’ a sale took place while others are employing bogus delivery services to print records of imaginary shipments. Incredibly, some operators are actually going to the trouble of shipping empty packages to give their ruse even more authenticity. 


Meanwhile, authorities in Yunnan province recently warned the public that some non-gambling sites were being ‘hijacked’ to redirect visitors to gambling sites. The Paper reported one such instance in which a local tech company hired a third-party to maintain its website, but their contract wasn’t renewed after it expired.

The web management company then allegedly tampered with the site’s code so that individuals trying to access the site found themselves staring at a gambling site. The Paper provided a screenshot of the site, which bears a striking resemblance to UK online betting giant Bet365’s traditional home page. (Then again, maybe it’s those pesky Bulgarians at Betio, who’ve been known to pay ‘homage’ to the Stoke firm from time to time).