In China, an over-the-counter (OTC) trader is suspected of laundering $73,500 to Tether USDT. This is reported on news site 8BTC today.
Over-the-counter (OTC) deal
The dealer is said to have helped criminals convert 500,000 Chinese yuan (~$73,500) into Tether USDT.
The money, which would have been earned with a ponzi scheme, was first sent to the OKEx exchange. Then the money was converted into USDT via the OTC trader.
An OTC deal takes place outside the order book of an exchange, so it cannot influence the price on a market. Each exchange does have an OTC desk to allow large chunks of Bitcoin Revolution to change hands. This prevents unexpected price fluctuations, a practice that is also used by securities dealers, for example.
The OTC trader now has to prove to the authorities that he knew nothing about the scam. Otherwise he could face a high penalty.
Recently, the Central Bank of China created a blacklist of OTC traders. The aim is to prevent the laundering of criminal funds via these accounts.
It is unclear on what scale these practices are taking place. As soon as someone appears on the list, their bank accounts are frozen.
For Chinese investors, OTC deals are a way of stashing their capital in bitcoin. They go to Bitcoin via Tether because of capital controls through these services. However, China wants to prevent capital from flowing out of the country. Because bitcoin trading is banned in the country, but offshore exchanges are tolerated again.