Tether, one of the largest cryptocurrency platforms with $95 billion in circulation, has been identified by the United Nations on Drugs and Crime as a favoured payment method for money launderers and fraudsters opening in Southeast Asia.
The report was released on Monday highlighting the use of Tether’s crypto token at the core of the burgeoning industry of scams, including the notorious pig-butchering strategy.
The pig-butchering technique involves engineering false romantic connections to gain victims’ trust before persuading them to transfer substantial sums of money. The UN underscores the rapidly growing user of sophisticated, high-speed money laundering teams specialising in underground tether.
“In recent years, law enforcement and financial intelligence authorities have reported the rapidly growing use of sophisticated, high-speed money laundering … teams specialising in underground tether,” said the report.
First reported by the Financial Times, the report points out that the evolution of cryptocurrency coupled with rapid technological advancements, has empowered Southeast Asia’s organised crime gangs to utilise black-market casinos for laundering illicit funds.
Online gaming platforms, especially those operating illegally, have become popular vehicles for cryptocurrency-based money launderers, particularly those using Tether.
As Tether is so widely distributed and is a stablecoin pegged to the US dollar, it allows traders to swiftly move in and out of crypto trades, distinguishing it from non-pegged cryptocurrencies like bitcoin, predominantly used for speculation.
In recent years, law enforcement and financial intelligence authorities have successfully dismantled several money laundering networks involved in moving illicit Tether funds. Notably, Singaporean authorities recovered $737 million in cash and crypto in August last year, as part of an operation targeting such networks.
“Organised 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 Jeremy Douglas of the UN’s Office of Drugs and Crime.
Despite broad crackdowns on digital assets, criminal groups continue to embrace Tether’s token as an effective method of moving funds. Some casinos have even specialised in handling the token, with one syndicate in Shan State, Myanmar, advertising Tether exchange services on a busy street.
Tether has been working with authorities to prevent the use of crypto by criminal elements. The number of blacklisted Tether wallets has surged by approximately 27%.
In 2021, the Commodity Futures Trading Commission imposed a $41 million fine on Tether, alleging misleading statements about having enough dollars to back its stablecoin. Despite regulatory challenges, Tether’s token remains a prominent choice for illicit financial activities in the region.
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