Kidnappers and Criminal Gangs Turn to Tether in China

Tether’s USDT stablecoin is gaining increasing attention in China, and not in a good way.

Two worrying kidnapping cases have been reported in recent days—and in both cases, the stablecoin was demanded as ransom.

One incident saw a three-year-old boy abducted from a shopping center in Hong Kong.

Abductors silenced him with a cloth covering his mouth—and by the time his mother realized what had happened, he was gone.

Hours later, a demand came through for $660,000 in USDT, along with details of where the crypto should be sent.

Chilling photos went on to show the boy sleeping, with a message that added: "Don't call the police for the safety of the child."

Thankfully, in this instance, detectives sprang to action and began scouring security footage from the shopping mall. The child was found unharmed and reunited with his family, while two men were arrested.

Unfortunately, the other kidnapping did not have such an outcome.

Two Chinese nationals were abducted in the Philippines, and were bombarded with calls to transfer USDT worth up to $2 million. The ransom was not paid, and the bodies of both hostages were later found.

An Undercover Banking Operation

There are also growing signs that Tether is being used to facilitate criminal activity in other ways.

Back in May, police in the southwestern city of Chengdu revealed they had cracked a gang that was using USDT to provide "illegal foreign exchange services"—enabling clients to transfer funds abroad without detection, smuggle products, invest overseas and commit fraud.

The estimated value of this ring stood at $1.9 million, with investigators arresting more than 190 suspects as a result.

Police went on to warn that the stablecoin's use posed "a huge threat to national foreign exchange security and financial security."

Uncomfortable for Tether?

Combined, the kidnappings and the criminal activity could be used as a pretext for Beijing to clamp down on USDT even further.

Chinese officials have already warned that transacting in Tether is illegal—and late last year, it urged local authorities to embark to impose tighter restrictions and punish those responsible.

It could also be pretty uncomfortable for Tether, which has been seeking to bolster its image as major economies like the U.S. explore crypto regulation more closely.

Back in April, the stablecoin issuer had announced it was adding offshore Chinese yuan to its basket of supported fiat currencies, making conversions with the likes of the dollar and euro easier.

But data from Etherscan suggest CHNT hasn't enjoyed much traction given it has an on-chain market capitalization of just $3.4 million.