Tether’s USDT is one of the big three in terms of market cap in the cryptocurrency world and the top stablecoin globally. A new report by the United Nations, however, flagged the token as the favorite of fraudsters. This comes despite the relentless crackdown of regulatory authorities on illicit activities involving cryptos.
The UN Report
The latest paper of the UN via its Office on Drugs and Crime (UNOC) is titled, “Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat.” It highlights the rapid evolution of transnational organized crime in the East Asian and Southeast Asian (SEA) regions and how they are employing new technologies, especially decentralized currencies, to hide their trail.
USDT is pegged and backed by the US dollar with a $40 billion trading volume and a $95 billion market cap as of this writing. These numbers make Tether’s coin as having the most liquid market in the stablecoin niche and an alluring choice for moving money beyond borders.
According to the UNOC’s findings, USDT on the TRON blockchain became the choice of regional cyberfraud operations and money launderers due to its efficiency, stability, and low fees. On top of these, it offers the anonymity that these bad actors need to bypass know-your-customer (KYC) procedures and cover their tracks from regulatory bodies and law enforcement authorities.
An independent investigation conducted between September 2022 and September 2023 by Bitrace Fund Audit unveiled 17.07 billion USDT worth of activities linked to illegal currency and commodity trading, unfair collection and payment practices, and other criminal operations in the East and SEA regions. This coincided with the data provided by various law enforcement and financial intelligence units there, which named USDT as among the widely used cryptos by organized crime groups.
One of the growing trends in the criminal world is the use of sophisticated, high-speed money laundering “motorcade” teams. These specialize in USDT-to-fiat exchanges within the underground ring. These operators also utilize mule bank accounts scattered throughout the Asia-Pacific region, which they purchase from accomplices for as low as US $30. The UN said that this chain of activities was the reason why China eventually banned cryptocurrency transactions, trading, and mining in 2021.
Another alarming technique revealed by the document is the way criminals use Telegram groups to profile their victims. From there, the information collected is utilized to create dummy profiles capable of bypassing KYC and even digital face verification procedures.
21 Million Tethered in $307 Million USDT Money Laundering Case in China
The most recent high-stakes bust involving USDT happened a few months ago in China. This led to the sentencing of 21 people for crypto-related fraud by a Chongqing court as they attempted to wash 2.25 billion RMB (US $307 billion at that time’s exchange rates) worth of USDT into fiat.
The perpetrators employed the earlier-mentioned motorcade teams to run their operations. They directed their dirty USDT haul through virtual P2P exchanges, which were then withdrawn as cash by mules who make the transactions appear as payments for projects or salaries.
Final Thoughts
The UN’s findings highlight the need for stronger regulations aimed at combatting illicit cryptocurrency activities, especially in the East Asia and SEA areas. Likewise, it reinforces the importance of enhanced KYC measures to keep up with the sophisticated methods used by fraudsters nowadays.