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Here's Why Tether has Become the Preferred Cryptocurrency for Money Laundering and Scams

The UN report reveals Tether, a widely traded cryptocurrency, is now a pivotal tool for criminals and money launderers.
Image Source: Pexels | Photo by RDNE Stock project
Image Source: Pexels | Photo by RDNE Stock project

The unregulated nature of cryptocurrencies makes them attractive options for digital cross-border transactions, but it also pushes the virtual asset into the shadows, where dubious players can exploit them for illicit activities. After the blockchain ecosystem was hit by scams and volatility, the United Nations Office on Drugs and Crime (UNODC) has raised concerns about Tether becoming a preferred currency for money laundering and fraud in East and Southeast Asia. Here's more about the rising use of Tether by organized crime groups for illicit activities in the region.

Tether is a company that operates a blockchain platform and issues digital tokens, with USDT being its most notable token, pegged one-to-one to the U.S. dollar's value. Its stability and user-friendly nature as well as anonymity, and low transaction fees have made it the top choice for fraudsters and money launderers.

RDNE Stock project  | Pexels
RDNE Stock project | Pexels

As authorities across the globe struggle to contain extortion rings and drug trade online, the UN report has highlighted a surge in cyber fraud, money laundering, and underground banking cases involving Tether. It mentions alarming schemes like "sextortion" and "pig butchering," indicating the diverse range of illegal activities associated with this cryptocurrency.

Criminals are advertising sophisticated, high-speed money laundering pulled off with Tether, and are increasingly visible on social media platforms like Facebook, TikTok, and Telegram. The UN emphasizes the rapid growth of illicit digital activities, especially on online gambling platforms, fueled by the use of Tether.

Image Source: Photo by David McBee | Pexels
Image Source: Photo by David McBee | Pexels

In a space marred by fluctuations in value, where cryptocurrencies and platforms have also been crashing, Tether belongs to a category of cryptocurrencies known as stablecoins. Unlike volatile assets like bitcoin and ether, stablecoins are pegged to assets like the US dollar, providing a relatively stable investment option. However, Tether has faced criticism for lack of transparency regarding its reserves, leading to a $41 million fine in 2021 by the U.S. Commodity Futures Trading Commission.

Growing concerns about illicit activities, industry scandals, and failures have intensified the scrutiny of the cryptocurrency sector by law enforcement, lawmakers, and regulators. But the blockchain industry itself operates within legal gray areas, lacking coherent guidance.

A visual representation of the digital Cryptocurrency | Getty Images | Photo by Chesnot
A visual representation of the digital Cryptocurrency | Getty Images | Photo by Chesnot

Tether is also preferred since it holds the highest daily trading volume among cryptocurrencies, with over $29 billion traded in the last 24 hours. Its total market capitalization is $95 billion, making it the third most valuable cryptocurrency, contributing around 5% to the total cryptocurrency ecosystem valued at approximately $1.76 trillion.

In conclusion, the UNODC report sheds light on the need for heightened awareness and regulatory measures to address the illicit use of Tether in the growing digital economy of East and Southeast Asia.