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News / Cryptocurrency Under Scrutiny: UN Warns of Tether’s Escalating Involvement in Southeast Asian Money Laundering Schemes

Cryptocurrency Under Scrutiny: UN Warns of Tether’s Escalating Involvement in Southeast Asian Money Laundering Schemes

The industry is mainly banking and blockchain (cryptocurrency).

05 min read

Tether (USDT): a well-known cryptocurrency platform’s startling image is shown in a recent report by the UN Office on Drugs and Crime as a preferred tool among money launderers and scammers in Southeast Asia. The report highlights a drastic increase in fraud, most notably the unsettling “pig butchering” method. The method is used to create fictitious romantic relationships with the customers. The victims are trapped through emotional and financial blackmailing in order to take advantage of them.

Tether, a stablecoin linked to the US dollar, has been dissolved. Based in Singapore, one such operation seized $737 million in cryptocurrency and cash in August of last year. Criminal associations and groups involved in money laundering activities still prefer to transfer money using Tether despite regulatory scrutiny and enforcement actions. The fact that many casinos have dedicated themselves to managing stablecoin transactions emphasizes the significance of cryptocurrencies in assisting illicit finance. The UNODC report: “Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden and Accelerating Threat,” released in January 2024, outlines current initiatives aimed at breaking up money laundering networks connected to Tether.

According to the report, “Online gambling platforms, especially those operating illegally, have emerged as among the most popular vehicles for cryptocurrency-based money launderers, particularly for those using Tether.”

“Organised crime has effectively created a parallel banking system using new technologies,” Jeremy Douglas of the UNODC narrated in the Financial Times. He further stressed: “The proliferation of loosely or entirely unregulated online casinos together with crypto has supercharged the region’s criminal ecosystem.”

Last year, on Tuesday, November 21, 2023, it was revealed in a press release by the US Department of Justice that nearly $9 million worth of Tether, a cryptocurrency linked to the US dollar, was taken from an organization by the Justice Department that had defrauded over 70 people using confidence frauds and romance scams involving cryptocurrencies. The financial system of a well-organized network of fraudsters that took millions from unsuspecting people all around the country was upset by the seizure. The criminal actors pretended to be investing with reliable companies and cryptocurrency exchanges to lure victims and persuade them to deposit cryptocurrency.

The U.S. Secret Service (USSS) seized cash from a cryptocurrency scam that employed a “chain hopping” tactic. The money was swapped for other cryptocurrencies and tracked down using a number of different cryptocurrency addresses. The FTC’s Consumer Sentinel Network and the FBI’s Internet Crime Complaint Center also contributed to the investigation. The USSS San Francisco Field Office collaborated with Assistant U.S. Attorneys Chris Kaltsas and Galen Phillips, Trial Attorney Georgiana MacDonald, and Trial Attorneys to safeguard the nation’s financial system and stop financial fraud enabled by cyberspace.

Tether’s cryptocurrency appealed to pig butchers because it promised quick, permanent blockchain transactions. Criminal prosecutor Erin West reportedly said, “You’re creating a situation where victims are blinded by love, coupled with the opportunity to get rich quickly.” West raises the alarm that since victims would be required to make an unfamiliar purchase—something that was not feasible prior to the invention of cryptocurrencies—they would become misled by love or the chance to become wealthy rapidly.

What lesson could be learned from this news? To tackle increasing financial crimes, compliance officers and anti-fraud experts must be flexible and able to work technologically savvy. As the news explains, Tether and other cryptocurrencies are being used as money laundering conduits, so regulatory frameworks need to be strengthened, updates must be made, and robust solutions must be used to fight crimes like money laundering. It’s critical to understand the connection between virtual currencies and illicit activity. A complete approach must include identifying unusual criminal pathways, lobbying for technical solutions, and responding quickly.

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Published Date

January 16, 2024

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