Stay informed with free updates
Simply sign up Digital currencies myFT Digest – delivered straight to your inbox.
The United Nations has warned that Tether, one of the world's largest cryptocurrency platforms, has emerged as one of the leading payment methods for money launderers and fraudsters operating in Southeast Asia.
According to a report published Monday by the United Nations Office on Drugs and Crime, Tether's cryptocurrency, also known as Tether, is at the heart of an exploding industry of scams, including those that engineer false romantic connections to gain a victim's trust before luring them in. To transfer large sums of money – a strategy commonly referred to as “slaughtering the pigs”.
“In recent years, law enforcement and financial intelligence authorities have reported the rapidly increasing use of sophisticated, high-speed devices
Money laundering . . . “Specialized teams in the underground rope,” the report said.
The development of cryptocurrency, along with other rapid technological developments, has also spurred the decades-long practice among organized crime syndicates in Southeast Asia of using black market casinos to launder illicit money.
“Online gambling platforms, especially those operating illegally, have emerged as among the most popular tools for cryptocurrency-based money laundering, especially for those using Tether,” the report says.
Jeremy Douglas, of the UN Office on Drugs and Crime, told the Financial Times: “Organized crime has effectively created a parallel banking system using new technologies, and the spread of loosely or completely unregulated online casinos alongside cryptocurrencies has increased the ecosystem.” criminal in the region.
The digital token for Tether is a stablecoin – a cryptocurrency that typically follows hard currency to stabilize the price. Tether is pegged to the US dollar and allows traders to enter and exit cryptocurrency trades, unlike cryptocurrencies like Bitcoin which are not pegged to hard currencies and are mostly used for speculation. It is the largest of its kind with a trading volume of approximately $95 billion.
The UN report notes that in recent years, authorities have dismantled several money laundering networks responsible for transferring illicit Tether funds, including an operation in which Singaporean authorities recovered $737 million in cash and cryptocurrencies last August.
In November last year, after a joint investigation with US authorities and cryptocurrency exchange OKX, Tether froze $225 million worth of its tokens linked to a “pig slaughter” and human trafficking syndicate in Southeast Asia, the report said.
Erin West, a criminal prosecutor and cybercrime expert based in California, said pig butchers were drawn to Tether because the cryptocurrency promised fast, irreversible transactions on the blockchain.
“The tether is the mechanism of choice… It's fast and transactions can't be withdrawn. Once the money is moved, it's moved. You can't withdraw it again,” West said.
“You're creating a situation where victims are blinded by love, coupled with the opportunity to get rich quick… They're being asked to buy something they're not familiar with, and before cryptocurrency there weren't many opportunities to do that,” she added.
“Cryptocurrency regulations are long overdue,” Douglas said [the illicit activity] Or they practically do not exist, and the organized crime groups that use and fuel the vulnerabilities and vulnerabilities know it.
Despite a widespread crackdown on digital assets in the United States and elsewhere, criminal groups have continued to embrace Tether as an effective means of moving funds, to the point that some casinos have begun specializing in handling the token.
According to documents seen by the Financial Times, a money laundering gang in Myanmar's Shan State that also operates in Cambodia hung a banner on a busy street advertising Tether and promising to exchange the “black” digital currency for cash.
Tether did not respond to a request for comment.
In November last year, the stablecoin operator announced that it had brought US authorities onto its platform to help prevent illicit use of its token. Since then, the number of blacklisted Tether wallets has risen by approximately 27 percent, according to industry data provider CCData.
Tether has come under regulatory scrutiny in recent years over its asset management and relationships with financial institutions.
In 2021, the Commodity Futures Trading Commission, a US regulatory body, alleged that Tether made misleading statements about having enough dollars to back its stablecoin. Tether paid a $41 million fine without admitting liability.
In November last year, the Financial Times revealed that more than $1 billion had been deposited with a company affiliated with Britannia Financial Group, which was founded by Venezuelan-Italian banker Julio Herrera Vilotini, who was charged by US authorities in August 2022 with an alleged bribery scheme. Velutini denied the accusations and Britannia Financial was not accused of any wrongdoing. The case is ongoing.
