UN warns: Crypto token Tether is increasingly preferred by money launderers
Cryptocurrency platform Tether has emerged as one of the leading payment methods for money launderers and fraudsters operating in Southeast Asia. The United Nations warns about this. The Tether (USDT) crypto token is at the heart of a growing fraud industry, according to a report released on Monday by the UN Office on Drugs and Crime (UNODC).
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“In recent years, law enforcement and financial investigation agencies have reported the rapidly increasing use of sophisticated, high-speed money laundering teams specializing in underground networks,” the report said (PDF). The development of cryptocurrency, along with other technological developments, has reinforced the decades-long practice of organized crime gangs in Southeast Asia of using black market casinos to launder illegal funds.
Crypto exchanges are changing the game
“Casinos and related high-cash businesses have been vehicles for underground banking and money laundering for years, but the explosion of under-regulated online gambling platforms and crypto exchanges has changed the game,” said Jeremy Douglas, UNODC Regional Representative for Southeast Asia and the Pacific in a press release. “The expansion of the illicit economy has required a technology-driven revolution in underground banking to enable faster anonymized transactions, the commingling of funds and new business opportunities for organized crime. The development of scalable, digitized casino and crypto solutions has transformed the criminal business environment throughout Southeast Asia and particularly in the Mekong region.”
Accordingly, countless recent cases show that online casinos and associated businesses have been used by organized crime gangs to move and launder large amounts of government-backed fiat and cryptocurrencies, effectively creating channels to make billions in criminal money Integrate income into the financial system. “Organized crime groups have coalesced where they see vulnerabilities, and casinos and cryptocurrencies have proven to be the point of least resistance,” Douglas continued.
Tether tokens are particularly popular
The UN report notes that authorities have dismantled several money laundering networks in recent years that were primarily responsible for moving illegal Tether funds.
Tether was created in 2014 as a bridge between traditional banking systems and the emerging crypto market. Tether is a stablecoin. 1 Tether (USDT) is always worth 1 US Dollar (USD) and is backed by cash, notes, corporate bonds or other US dollar assets. It is estimated that there are 95 billion Tether tokens in circulation, making it the third largest cryptocurrency after Bitcoin and Ether. The Tether stablecoin is used by investors to trade Bitcoin, for example, without having to exchange crypto for fiat money, which costs additional time and money.
In November last year, Tether froze $225 million worth of tokens linked to a “pig slaughter” and human trafficking syndicate in Southeast Asia following a joint investigation with the U.S. Department of Justice and crypto exchange OKX, the report said . The term “pig slaughter” romance scam refers to cases in which fraudsters use social media, messaging and dating apps to build trust with their victims and then pressure them into investing in fake cryptocurrencies or online trading systems.
Attempts at regulation
Although Tether proactively cooperated with law enforcement in the case described in the UN report; In the summer of 2021, investigations against Tether itself led to shocks in the cryptocurrency market.
Since the collapse of the crypto trading platform FTX, the US government has tightened control of the crypto industry. At the beginning of June last year, the US Securities and Exchange Commission (SEC) sued Binance, the world‘s largest crypto exchange. In March, the US capital markets authority CTFC filed a lawsuit against Binance and founder Changpeng Zhao. The accusation: The crypto exchange is said to have knowingly enabled terrorist financing and money laundering and automatically destroyed evidence. A day after the action against Binance, the SEC also sued the US crypto top dog Coinbase.
A number of major economies, from Great Britain or Canada to the European Union, have also established rules for stablecoins. The EU guidelines are intended to contain crypto exchanges and make anonymous trading in crypto assets more difficult. They are due to come into force in June.
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