UN Warns Tether (USDT) Emerges as Go-to Currency for Scammers
The United Nations (UN) has issued a warning about the escalating misuse of the cryptocurrency Tether (USDT), particularly in Southeast Asia. The stablecoin is increasingly becoming the payment method of choice for money launderers and fraudsters, according to a report by the United Nations Office on Drugs and Crime.
Tether’s Appeal to Criminals
Tether’s appeal to criminals lies in its ability to facilitate speedy and irreversible transactions on a blockchain. Once the money is moved, it cannot be retracted, making it an attractive tool for illicit activities. Erin West, a criminal prosecutor and cybercrime expert, explains, “Tether is the mechanism of choice… it’s fast, and transactions cannot be retracted. Once the money is moved, it’s moved. You can’t pull it back”.
Lack of Cryptocurrency Regulations
Jeremy Douglas from the UN’s Office on Drugs and Crime attributes the criminal preference for Tether to the absence of cryptocurrency regulations. He remarks, “Cryptocurrency regulations are way behind [the illicit activity] or practically non-existent, and organized crime groups who use and feed off vulnerabilities and weaknesses know this”.
Tether in Scams and Money Laundering
The UN report reveals that Tether has emerged as a leading choice among fraudsters and money launderers operating in Southeast Asia. With a market capitalization exceeding $95 billion, Tether is described as a central player in the growing landscape of scams.
One prevalent tactic used by scammers is establishing fake romantic connections online to gain victims’ trust, subsequently convincing them to transfer substantial sums using Tether. This tactic is known as “pig butchering”.
Online gambling platforms, especially those operating illegally, have also emerged as popular vehicles for cryptocurrency-based money launderers, particularly those using Tether.
Call for Stricter Regulations
The UN’s report underscores the urgent need for stricter cryptocurrency regulations to curb the misuse of digital currencies like Tether. As the digital currency landscape evolves, criminal networks exploit Tether’s speed and irreversible transactions, creating a parallel banking system.
What measures have been taken by Tether
Tether follows stringent KYC and AML protocols in line with the Bank Secrecy Act and best practices of financial institutions. This includes conducting enhanced due diligence screenings for all applicants and cross-referencing them against sanctions databases such as the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).
The company collaborates with global law enforcement agencies to prevent unlawful activities involving its tokens. This includes working with the U.S. Department of Justice, the U.S. Secret Service, and the Federal Bureau of Investigation.
Tether has taken proactive steps, such as freezing $225 million worth of tokens linked to an international crime syndicate. This action was taken following investigations by Tether, OKX, and the U.S. Department of Justice, and it represents the largest such intervention by Tether to date.
It also utilizes tools from blockchain analysis firms like Chainalysis to investigate and track suspicious activities. This helps in identifying and taking action against illicit transactions.
Angel Marinov is the Managing Editor at Coinlabz. With extensive knowledge of crypto payments and blockchain use cases, Angel is a trusted source of accurate and timely information