Vedant Sahu
Tether, a major cryptocurrency platform known for its stablecoin, has been identified as a leading medium for money laundering and fraudulent activities in South-East Asia, according to a recent UN report. This stablecoin, also referred to as tether, is at the center of an increasing number of financial scams, including sophisticated “pig butchering” schemes that manipulate victims into transferring large sums of money.
The report, issued by the UN’s Office on Drugs and Crime, notes a significant rise in the use of high-speed, specialized money laundering teams focused on the underground use of tether. These developments in cryptocurrency technology have revitalized old methods used by organized crime syndicates, especially in black market casinos, making them more efficient in laundering illicit funds.
Online gambling platforms, often operating outside legal boundaries, have become prime hubs for crypto-based money laundering, with tether playing a pivotal role. Jeremy Douglas, representing the UN’s Office on Drugs and Crime, points out that organized crime has effectively established a parallel banking system that exploits the combination of unregulated online casinos and cryptocurrencies, thus enhancing the region’s criminal ecosystem.
Tether, which is tied to the US dollar to maintain price stability, differs from other cryptocurrencies like Bitcoin, which are mainly used for speculation and not pegged to hard currencies. With an estimated $95 billion in circulation, tether allows traders to move in and out of crypto trades more fluidly.
Law enforcement authorities have recently dismantled several networks responsible for laundering money through tether. This includes a significant operation by Singaporean authorities last August, recovering $737 million in cash and crypto assets. Additionally, in a collaborative effort with US authorities and a crypto exchange, Tether froze $225 million worth of its tokens linked to a criminal syndicate involved in human trafficking and “pig butchering” scams.
Erin West, a criminal prosecutor and cybercrime specialist, explains that the irreversible and rapid nature of transactions using Tether’s blockchain technology makes it a preferred tool for these fraudsters. Victims, often emotionally manipulated, are lured into unfamiliar transactions with the promise of quick wealth.
Douglas further emphasizes the lag in cryptocurrency regulations, which allows organized crime groups to exploit these gaps for illicit activities. Despite efforts to regulate digital assets in the US and other regions, criminal groups continue to leverage Tether’s token for moving funds, with some casinos even specializing in handling these transactions.
In a recent initiative, the operator of the stablecoin announced the involvement of US authorities on its platform to curb illicit usage. This has led to a 27% increase in the number of blacklisted Tether wallets, according to data from CCData.
Tether has faced regulatory scrutiny over asset management and its connections with financial institutions. In 2021, the Commodity Futures Trading Commission accused Tether of misleading statements regarding its dollar reserves, leading to a $41 million fine, which was settled without admitting liability.