USDT Rarely Detaches from Its Peg! China and India Crack Down on Tether Stablecoin, Arrest Operations Escalate Turmoil

Recently, the USDT stablecoin issued by Tether has experienced a rare slight fall away from its peg, attracting market attention. At the same time, authorities in China and India are ramping up efforts to combat cryptocurrency fraud involving USDT, with recent arrests highlighting the vulnerabilities of the digital financial ecosystem. These events pose challenges not only to the stability of USDT but also exacerbate the volatility in the cryptocurrency market and provoke deep reflection on the regulation of stablecoins.

Today (30) during the Asian session, USDT slightly fell to 0.9998 USD, and from the seven-day trend chart, it can be seen that it is in a slight de-pegging state.

(Source: CoinMarketCap)

China and India crack down on USDT fraud

China: On July 24, 2025, the Public Security Bureau of You County, Hunan Province, cracked a USDT fraud case, where three suspects used romance scams and forged "mining mechanisms" to steal funds from overseas victims. The criminals lured users into clicking malicious links through 30 mobile devices and foreign SIM cards, stealing USDT from their trust wallets. Despite the large scale of this fraud, the overall impact on the cryptocurrency market was minimal, and as of July 30, 2025, the price of USDT remained stable at $1.00, with a 24-hour trading volume decrease of 1.86%.

India: In India, law enforcement has arrested five suspects, including a 29-year-old "crypto queen" who is accused of orchestrating a scam to transfer stolen funds into USDT through an unregulated Telegram platform. The gang operated without official permission, exploiting victims by promising high returns on online tasks and recruiting "mule" bank accounts for money laundering. In a similar incident in Delhi, a 56-year-old doctor fell victim to a romance scam, losing $115,000. The scam fabricated tax demands as an excuse for freezing crypto assets. These cases highlight India's fragmented regulatory landscape. In 2020, a Supreme Court ruling overturned the Reserve Bank of India's ban on banks providing services to the crypto business, but licensing and immediate oversight remain lacking.

USDT Regulatory Loopholes and Fraud Spread

The lack of strong regulation has allowed criminals to utilize stablecoins such as USDT for large-scale thefts. Experts from the Coincu research team pointed out that while the crackdown in Hunan province has only had a localized impact, the absence of official statements makes it even more difficult to assess systemic risks. Meanwhile, Indian tax authorities have intensified enforcement under Section 115BBH, imposing a 30% tax rate and a 1% withholding tax (TDS) on cryptocurrency transactions, but enforcement loopholes still exist. Similar challenges have emerged globally, with reports indicating that 15,000 victims in South Korea were involved in a $225 million cryptocurrency scam.

Responding to Challenges: Balancing Innovation and Security Measures

As fraudulent activities increasingly leverage technology and social vulnerabilities, authorities face mounting pressure to strike a balance between innovation and safeguards. Actions taken in Hunan and Delhi highlight the urgent need for a structured framework to address the unregulated digital finance landscape, as trust and misinformation remain powerful tools for fraudsters.

Conclusion:

USDT has rarely fallen away from its peg, and the severe crackdown by authorities in China and India on USDT fraud serves as a reminder of the vulnerability of the stablecoin market and the importance of regulation. As Crypto Assets become increasingly popular, establishing a sound regulatory framework that effectively combats illegal activities involving digital assets while not hindering financial innovation will be a common challenge faced by countries around the world.