According to the United Nations (UN), the stablecoin Tether (USDT) has established itself as one of the preferred channels for money launderers in Southeast Asia.
A detailed UN report describes current developments in money laundering in the Mekong region around China, Cambodia, Myanmar, Thailand, Laos and Vietnam. This region has long been known as a money laundering center, but has apparently expanded its position even further in recent years.
First of all, the corona pandemic has made it more difficult to smuggle cash across borders. This initially led to a decline in classic dollar smuggling. But it forced the money laundering industry to innovate, making it stronger today than it was before Corona. There is now a dizzying array of sophisticated methods for concealing the flow of money. Even experts find it difficult to keep track of things, and the report shows concern about losing control completely.
The mainstays of this ecosystem are casinos and now crypto exchanges. They are able to “move and launder massive volumes of fiat and cryptocurrency; they create channels to efficiently integrate billions in criminal proceeds into the formal banking system.” According to the UN’s Jeremy Douglas, “little or unregulated online casinos, along with crypto, have turbocharged the region’s criminal ecosystem.”
The most important cryptocurrency is not Bitcoin, as was long predicted, but Tether (USDT). The stablecoin has stable value and can be transferred on the Tron blockchain quickly, cheaply and, above all, KYC-free. Apparently, Tether is about to take over the role of dollar bills in money laundering – the single currency of global organized crime. This would be one of the types of killer crypto apps that no one really wanted.
Authorities and investigators are finding it difficult to determine the true volume of money laundering in the region and with Tether. The ecosystem is too interconnected for this, while the methods develop too quickly.
But there are several strong indications: More and more unlicensed online casinos are also offering USDT-related services, such as anonymous exchange. Furthermore, prosecutors are increasingly coming across so-called “motorcade” teams that specialize in exchanging fiat money for Tether by routing the money through multiple bank accounts and crypto exchanges.
A relatively recent analysis concludes that around 17.07 billion USDT was used in criminal transactions between September 2022 and September 2023. That would be around a fifth of all Tethers in circulation during this time. Law enforcement officers and money laundering analysts in the Mekong region say Tether dollars are organized crime’s favorite cryptocurrency. The report makes this clear through dozens of uncovered cases in which Tether was involved.
Tether itself does not respond to the report. The issuer of the stablecoin seems to be torn. On the one hand, she is clear that Tether’s success is also due to the fact that it is perceived as a kind of “pirate dollar” that, like cash, is outside the control of banks.
On the other hand, Tether is taking ever more decisive action against the misuse of dollar tokens by criminals. Unlike Bitcoin and cash, it is possible to freeze addresses with Tether, which the issuer is using more and more frequently. Partnerships with the Secret Service and FBI are also intended to help combat money laundering and terrorist financing more effectively and give the stablecoin legitimacy in the USA.
With the new UN report, the pressure on Tether to take action against criminal misuse of the stablecoin is likely to increase further.