Tether’s USDT linked to money laundering and fraud in Southeast Asia, UN report claims
Posted: January 15, 2024 7:51 AM Updated: January 15, 2024 7:51 AM
Correction and fact check date: January 15, 2024, 7:51 AM
briefly
Tether’s USDT is emerging as a tool for multiple money laundering and fraud operations in Southeast Asia, according to a new report from the United Nations.
The USDT stablecoin issued by Tether has emerged as an important tool for money laundering and fraud in Southeast Asia, as revealed in a new report from the United Nations Office on Drugs and Crime (UNODC).
According to the report, in recent years, law enforcement and financial intelligence authorities have observed a significant increase in the use of sophisticated high-speed money laundering and underground tether specialist teams.
The development of cryptocurrencies and rapid technological advancements have led organized crime groups in Southeast Asia to utilize black market casinos to launder illicit funds.
“Online gambling platforms, especially those operating illegally, have emerged as one of the most popular vehicles for cryptocurrency-based money laundering, particularly those using Tether,” the UN report said.
Jeremy Douglas, UNODC’s Regional Representative for Southeast Asia and the Pacific, said organized crime had effectively created a parallel banking system through new technologies. Moreover, the proliferation of loosely or completely unregulated online casinos along with cryptocurrencies have strengthened the region’s criminal ecosystem.
USDT is widely used for “pig slaughter”
UNODC also said that globally popular stablecoins have been widely utilized in underground scams, including one called “pig slaughter”.
Last November, Tether signaled its support to the U.S. Department of Justice, including freezing approximately $225 million in USDT in external self-custodial wallets linked to an international human trafficking ring involved in a pig slaughter scam.
Erin West, a California criminal prosecutor and cybersecurity expert, explained that “pig butchers” are attracted to Tether’s digital coin, which promises fast, irreversible transactions on the blockchain.
“Tether is the preferred mechanism. It’s fast and the transaction can’t be cancelled. Once money is transferred, it keeps moving. There is no way to back out,” said Erin West.
She emphasized that victims are often tempted by a mix of emotional attachment and promises of quick wealth, especially when dealing with something unfamiliar like cryptocurrency, where opportunities were limited before cryptocurrencies.
Role in other illegal activities
The report also highlighted law enforcement’s success in dismantling several money laundering networks involving illicit Tether funds. In August last year, Singapore authorities conducted an operation and recovered about $735 million in both cash and cryptocurrency.
Tether’s digital token USDT is a stablecoin, a cryptocurrency designed to stabilize its value by generally tracking hard currency.
Being pegged to the U.S. dollar makes it easy for traders to explore cryptocurrency trading, distinguishing it from unpegged cryptocurrencies like Bitcoin, which are primarily used for speculation. With a circulating supply of approximately $95 billion, USDT is the largest stablecoin of its kind.
Tether’s Approach to Regulatory Issues
Tether has come under regulatory scrutiny in recent years regarding its asset management and relationships with financial institutions.
In 2021, the US Commodity Futures Trading Commission accused Tether of making misleading statements that it had enough dollars to support stablecoins. Tether paid a $41 million fine without admitting liability.
Likewise, in November 2023, the stablecoin operator revealed that it was cooperating with U.S. authorities to prevent illicit use of its tokens. Since then, the number of blacklisted Tether wallets has increased by about 27%, according to a report by industry data provider CCData. Last December, Tether CEO Paolo Ardoino wrote to U.S. lawmakers informing them that the company had enlisted the U.S. Secret Service and Federal Bureau of Investigation on its platform.
By 2023, Tether’s share of global stablecoin supply has increased from 50% to 71%.
The company’s growing role in money laundering and fraud in Southeast Asia, as highlighted in the UNODC report, highlights the importance of regulatory oversight of the widespread misuse of cryptocurrencies widely used in the region.
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Alisa is a reporter for Metaverse Post. She focuses on everything related to investing, AI, metaverse, and Web3. Alisa holds a degree in Art Business and her expertise lies in the fields of art and technology. She developed a passion for journalism through writing about VCs, notable cryptocurrency projects, and participating in science writing.
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alice davidson
Alisa is a reporter for Metaverse Post. She focuses on everything related to investing, AI, metaverse, and Web3. Alisa holds a degree in Art Business and her expertise lies in the fields of art and technology. She developed a passion for journalism through writing about VCs, notable cryptocurrency projects, and participating in science writing.
more articles