According to the UN, USDT allows fraudsters to quickly recycle large sums of dirty money. The stablecoin offers them a discreet and difficult-to-trace exit route for their illicit gains. An alarming observation which highlights the potential abuses of crypto.
USDT at the heart of large-scale scams
According to the United Nations report, USDT has become a vital cog for certain criminal networks operating in Southeast Asia. The stablecoin allows them in particular to launder profits generated by sophisticated “pig butchering” type scams.
These scams involve seducing a victim on social networks, before extracting large sums of money from them. According to the UN, scammers then frequently use USDT to disguise the fraudulent origin of the stolen funds.
Thanks to the speed of transfers and the difficulty of tracing transactions, the stablecoin offers an ideal way to recycle these illicit profits on a large scale. A worrying observation about the possible abuses of crypto.
An opaque operating system
Several characteristics of USDT make it a popular tool for criminals in Asia and beyond. First of all, it is the largest stablecoin in the world in terms of capitalization. It benefits from strong liquidity and widespread adoption.
But above all, its governance lack of transparency according to its detractors. The issuer of USDT, the Tether company, has repeatedly been the subject of controversy regarding its reserves and its operation.
This opacity benefits criminals, who can trade and transfer large volumes of USDT without leaving a clear trace on the public blockchain. A growing problem identified by the UN.
A challenge for regulators
This observation poses a real challenge to the authorities, who are struggling to fight against this type of transnational cyber crime. Criminal groups take advantage of the decentralized nature of crypto and the difficulty of coordinating responses across jurisdictions.
For the UN, limiting the fraudulent use of USDT will require concerted action. This will notably involve improving international judicial cooperation, exchanges of information and the traceability of suspicious transactions.
But recent initiatives around the regulation of cryptocurrencies, such as the law on digital assets in Europe, are moving in the right direction. On condition of extending them beyond regional borders.
The almost institutionalized use of USDT by certain criminal groups in Asia is indicative of the risks associated with crypto. Behind the promises of innovation, there remain gray areas conducive to deviations. This observation calls for increased mobilization of regulators, at the national and international level. Because blockchain technology does not escape the ethical and legal requirements imposed on the financial sector as a whole.
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