Markets News Report
January 15, 2024

Tether’s USDT Linked to Southeast Asian Money Laundering and Scams, Claims United Nations’ Report

Tether's USDT Stablecoin Underlines Major Role in Southeast Asian Money Laundering and Scams, UNODC Report Finds

The USDT stablecoin issued by Tether has emerged as a significant tool for money laundering and scams 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 observed a significant increase in the use of sophisticated, high-speed money laundering and teams specializing in underground Tether.

The evolution of cryptocurrency, coupled with rapid technological advancements, has spurred organized crime groups in Southeast Asia to utilize black market casinos for laundering illicit funds. 

“Online gambling platforms, especially those operating illegally, have emerged as among the most popular vehicles for cryptocurrency-based money launderers, particularly for those using Tether,” claims UN’s report. 

Jeremy Douglas, regional representative of the UNODC for Southeast Asia and the Pacific said that organized crime has effectively established a parallel banking system through new technologies. Moreover, the proliferation of loosely or entirely unregulated online casinos, coupled with cryptocurrencies, has intensified the region’s criminal ecosystem.

The USDT’s Extensive Use in “Pig Butchering” 

The UNODC also indicated that the globally popular stablecoin has been extensively utilized in underground fraud, including scams termed “pig butchering.” 

In November, Tether revealed its assistance to the United States Department of Justice, freezing approximately $225 million in USDT from external self-custodied wallets associated with an international human trafficking group engaged in a pig-butchering scam.

Erin West, a California criminal prosecutor and cybersecurity expert, explained that “pig butchers” are drawn to Tether’s digital coin due to its promise of fast, irreversible transactions on a blockchain. 

“Tether is the preferred mechanism; it’s swift, and transactions are irrevocable. Once money is transferred, it stays moved; there’s no way to retract it,” said Erin West. 

She highlighted that victims are often lured by a mix of emotional attachment and the promise of quick wealth, especially when dealing with something unfamiliar like cryptocurrency, which had limited pre-cryptocurrency opportunities.

Role In Other Illicit Operations 

Additionally, the report highlighted law enforcement’s success in dismantling several money laundering networks associated with illicit Tether funds. In August of last year, Singaporean authorities conducted an operation, leading to the recovery of approximately $735 million in both cash and cryptocurrency.

Tether’s digital token USDT is a stablecoin, a cryptocurrency designed to stabilize its value by typically tracking a hard currency.

Pegged to the US dollar, it enables traders to easily navigate in and out of crypto trades, distinguishing it from non-pegged cryptocurrencies like Bitcoin, which are primarily used for speculation. With approximately $95 billion in circulation, USDT stands as the largest stablecoin of its kind.

Tether’s Approach to Regulatory Challenges

Tether has faced regulatory scrutiny in recent years concerning the management of its assets and its connections with financial institutions.

In 2021, the US Commodity Futures Trading Commission accused Tether of making misleading statements regarding having sufficient dollars to support its stablecoin. Tether paid a $41 million fine without admitting liability. 

Likewise in November 2023, the stablecoin operator revealed its collaboration with US authorities to prevent the illicit use of its token. Subsequently, the number of blacklisted Tether wallets increased by approximately 27%, as reported by industry data provider CCData. In December, Tether chief executive officer Paolo Ardoino informed United States legislators in a letter that the company has enlisted the US Secret Service and Federal Bureau of Investigation onto its platform.

2023 has witnessed an increase in Tether’s share of the global stablecoin supply from 50% to 71%.

The company’s increasing role in Southeast Asian money laundering and scams, as highlighted by the UNODC report, emphasizes the importance of regulatory oversight over the extensive misuse of the popular cryptocurrency in the region.

Disclaimer

In line with the Trust Project guidelines, please note that the information provided on this page is not intended to be and should not be interpreted as legal, tax, investment, financial, or any other form of advice. It is important to only invest what you can afford to lose and to seek independent financial advice if you have any doubts. For further information, we suggest referring to the terms and conditions as well as the help and support pages provided by the issuer or advertiser. MetaversePost is committed to accurate, unbiased reporting, but market conditions are subject to change without notice.

About The Author

Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at [email protected]

More articles
Alisa Davidson
Alisa Davidson

Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at [email protected]

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