Tether Stablecoin Becomes ‘Preferred Choice’ for Scammers and Criminals, Warns UN

Top line

Tether, one of the world’s most traded cryptocurrencies, has become a key tool for criminals, money launderers and scammers, according to a United Nations study. report published Monday amid intensifying legal and regulatory scrutiny over how digital assets are used to support illicit activities.

Tether is becoming a top choice for criminals, the UN has said.

AFP via Getty Images

Highlights

Tether has quickly become the platform of choice for money laundering and fraud operations in East and Southeast Asia, the United Nations Office on Drugs and Crime (UNODC) has warned in a report on organized crime and illicit banking in the region.

Tether, which did not immediately respond to Forbes’ request for comment, is a company that runs a blockchain platform and issues digital tokens tied to real-world currencies with the backing of its own finances. reservesnotably USDT, or tether, which is linked to the US dollar at a rate of one to one.

The agency said Tether’s stability, ease of use, anonymity and low transaction fees have helped the digital token become a “preferred choice” for fraudsters and money launderers and agencies. intelligence agencies in the region claim that Tether ranks “among the most popular cryptocurrencies” used by organized crime groups.

Its popularity is illustrated by the “increasing volume” of cyber fraud, money laundering and underground banking deals, the UN said, including schemes such as “sextortion”, a form of blackmail threatening to publish material. sexual content or information about a person, and “pig”. butchery”, social engineering romance designed “fattening” the targets before extracting money from them.

The UN said financial authorities and law enforcement have reported a rapid increase in the use of “sophisticated, high-speed money laundering” teams specializing in tether in recent years, with criminals doing the advertising their services on social media platforms like Facebook, TikTok and Telegram.

Online gaming platforms in particular have “become one of the most popular vehicles for cryptocurrency-based money launderers,” particularly those using tether, the report said, warning that they “fuel the “intensification” of the region’s “rapidly growing illicit digital economy.” »

Crucial quote

“Organized crime has effectively created a shadow banking system using new technologies,” said Jeremy Douglas of UNODC. said the Financial Times. Douglas warned that “the proliferation of minimally or completely unregulated online casinos as well as crypto has energized the region’s criminal ecosystem.” Crypto regulation is “far behind schedule or virtually non-existent,” he warned. “Organized crime groups who exploit and prey on vulnerabilities and weaknesses know this. »

Key context

Tether is a form of cryptocurrency known as a stablecoin. While the value of traditional crypto assets like bitcoin and ether, as well as well-known and valuable “meme” currencies like dogecoin, can fluctuate wildly for little or no reason, stablecoins are tied to other assets, in particular to fiat currency like the dollar, tangible assets like gold or via a algorithm. With this in mind, stablecoins are seen as a relative haven of stability in the otherwise volatile and unpredictable crypto market. Tether claims to maintain the stability of the greenback peg by having sufficient levels of currency in reserve, although it has been criticized for its lack of transparency over its holdings in the past and in 2021 it has come under fire. fined $41 million by the U.S. Commodity Futures Trading Commission for making misleading statements about its reserves. Increasing levels of illicit behavior on digital platforms, a series of high-profile scandals and failures within the industry, and the growing popularity of cryptocurrencies have led to increasing meticulous examination on the sector from law enforcement, legislators and regulators. Currently, the sector largely operates within the legal gray areas of existing financial frameworks and lacks consistent or comprehensive guidance. While fears that its anonymity will enable criminal activity appear to be a major concern among lawmakers targeting crypto, the UN report cites data from blockchain analytics firms indicating that “less than 1%” of all payments in cryptocurrency are illegal.

Tangent

At the time of writing, Tether had the highest daily trading volume of any cryptocurrency by a wide margin. Over the past 24 hours, over $29 billion worth of Tether has been traded (bought or sold). For comparison, crypto titans Bitcoin and Ether – the second and third most traded tokens – had traded around $19 billion and $13 billion, respectively, during the same period.

Large number

95 billion dollars. This is the total market capitalization attachment. This makes Tether the third most valuable cryptocurrency by market capitalization. It’s worth nearly double the BNB of Binance, which sits behind it in fourth place at $48.2 billion, but falls far short of the market cap of ether ($304 billion) and bitcoin ($834 billion). of dollars). Overall, Tether represents around 5% of the total cryptocurrency ecosystem, worth around $1.76 trillion.

Further reading

Tether Untethered: World’s largest stablecoin loses $1 as crypto market collapses (Forbes)

Crypto token Tether increasingly favored by money launderers, UN warns (Financial Times)

Myanmar dethrones Afghanistan as world’s top opium producer (Forbes)

US seizes $9 million in Tether coins linked to romance scams (Bloomberg)

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