Indian scammers are exploiting stablecoins like USDT to move illicit funds internationally.
Police in Rajasthan arrested suspects involved in laundering over INR 1 crore via USDT stablecoin.
Authorities previously busted a similar scam, arresting 15 people linked to USDT laundering .
Cybercriminals in India are increasingly exploiting blockchain technology to move illicit funds across borders, with Tether’s USDT USDT$1.0024h volatility:0.0%Market cap:$141.65 BVol. 24h:$57.96 B
emerging as a preferred tool for money laundering. The stablecoin’s ease of transfer, liquidity, and pseudo-anonymity have made it a go-to asset for fraudsters seeking to bypass traditional banking regulations.
In a recent crackdown, Rajasthan law enforcement arrested several money mules involved in converting over INR 1 crore (approximately $115,546) into USDT before funneling it to cybercriminal networks overseas. Authorities believe the masterminds behind these operations are running large-scale scams from locations such as Dubai and France.
How the Scammers Operate
Investigators uncovered a sophisticated laundering network in which scammers recruit local individuals to facilitate fund transfers. These operatives, often referred to as “money mules”, provide access to bank accounts, ATM cards, mobile phones, and SIM cards, which are then used to deposit stolen money from digital scams.
Once the funds are deposited, the scammers then convert them into USDT using local crypto exchanges. The stablecoins are then transferred to offshore wallets controlled by cybercrime syndicates, making it difficult for authorities to trace and recover the illicit assets.
During the recent arrests, Rajasthan police confiscated multiple mobile devices and SIM cards linked to the operation. Superintendent of Police Arshad Ali confirmed that these money mules played a crucial role in ensuring the seamless transfer of funds while keeping the primary operators hidden.
India’s Fight Against Crypto-Based Scams
The case is part of a larger trend where Indian law enforcement has been tackling crypto-based money laundering schemes. In a previous operation, authorities dismantled a similar network that leveraged USDT, leading to the arrest of 15 suspects.
In December 2024, India’s Enforcement Directorate (ED) busted a cyber fraud syndicate in the Delhi-NCR region, arresting two chartered accountants and a crypto trader. The group was involved in laundering funds from cybercrimes by converting them into cryptocurrencies like USDT. The ED seized INR 47 lakh in cash and crypto assets worth INR 1.36 crore during the operation.
Additionally, the Delhi Police, in collaboration with Binance, uncovered another laundering scheme involving the transfer of over 100,000 USDT. Investigators found that cybercriminals used blockchain’s pseudo-anonymity to obscure the origins and destinations of illicit funds.
Regulatory Challenges and Future Crackdowns
The increasing use of USDT for illicit financial activities has drawn scrutiny from regulators worldwide. Tether, the company behind USDT, has faced criticism for its role in facilitating financial crimes.
To address these concerns, Tether announced in May 2024 that it was working with Chainalysis to develop a transaction monitoring platform aimed at identifying suspicious activity.
In September, the stablecoin issuer partnered with blockchain network Tron and TRM Labs to establish the T3 Financial Crime Unit, tasked with monitoring illicit transactions on the Tron network.
However, given the decentralized and borderless nature of blockchain, law enforcement agencies continue to face significant challenges in curbing the misuse of stablecoins for cross-border money laundering.
With India intensifying its crackdown on cyber fraud, authorities are expected to implement stricter surveillance measures and collaborate with global crypto firms to track illicit fund movements.
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Chimamanda is a crypto enthusiast and experienced writer focusing on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love for travel and food, bringing a fresh and engaging perspective to her work.