By
Chimamanda U. Martha
April 24th, 2024
Despite the increasing involvement of the USDT stablecoin in criminal activities, the UN has reported that law enforcement authorities have successfully dismantled various money laundering organizations responsible for transferring illegal funds using USDT.
The United Nations (UN) has warned that Tether’s USDT stablecoin has become the preferred cryptocurrency for money laundering schemes and other illicit activities in Asia.
The Financial Times reported Monday, citing a report published by the UN’s Office of Drug and Crime Unit, that nefarious actors in Southeast Asia are using the digital assets to engage in fraudulent activities, including the infamous romance scam known as pig butchering.
Rising Criminal Activities Involving Tether
The UN’s Office of Drug and Crime Unit uncovered that in recent years, the Asian region has been significantly entangled in highly sophisticated, high-speed money laundering and other criminal activities involving Tether’s USDT.
The UN’s report cited an example of a money laundering syndicate that operates in both Myanmar, and Cambodia, displaying a sign on the street advertising USDT and offering to exchange “black” tokens for cash.
These crimes also extend to online gambling platforms operating illegally in the region. According to the Financial Times report, these platforms have become a preferred choice for crypto-related money launderers, especially those using USDT, representing the world’s largest stablecoin.
Jeremy Douglas, an executive at the UN, said that the emergence of cryptocurrencies and new technologies has successfully created an alternative banking system for bad actors.
“Organized crime has effectively created a parallel banking system using new technologies, and the proliferation of loosely or entirely unregulated online casinos together with crypto has supercharged the region’s criminal ecosystem,” said Douglas.
Tether Froze $225 Million in USDT
Despite the increasing involvement of the USDT stablecoin in criminal activities, the UN has reported that law enforcement authorities have successfully dismantled various money laundering organizations responsible for transferring illegal funds using USDT.
In a notable incident last year, Singaporean authorities busted an illegal organization in August, recovering $737 million in cash and crypto.
During the same period, Tether, in collaboration with US authorities and the crypto exchange OKX, froze USDT tokens valued at $225 million. Coinspeaker reported the funds were traced back to a syndicate engaged in unlawful activities related to “pig butchering” and human trafficking in Southeast Asia.
On November 16, Tether, the stablecoin issuer, addressed letters to the US Senate Committee on Banking, Housing, and Urban Affairs and the US House Financial Services Committee, expressing its dedication to combating illicit activities within the digital assets space.
In these letters, Tether disclosed its proactive measures, including implementing a reactor tool obtained from Chainalysis, a blockchain data analytics company. This tool provides reports on all transactions conducted in Tether’s secondary markets.
Additionally, Tether said it established a dedicated Compliance Department equipped with an anti-money laundering (AML) and know-your-customer (KYC) program. The tool aims to assist the company in analyzing blockchain transactions, identifying wallets associated with problematic activities, and preventing funding for terrorist groups.
Up to this point, the stablecoin issuer has frozen more than 1,260 addresses linked to illicit activities, with a combined value surpassing $875 million, according to data from Dune Analytics.