Tether Cryptocurrency – concerns of money laundering and scams in Southeast Asia

Category: Asia Blockchain Crypto

The United Nations’ office on drugs and crime has issued a stark warning about Tether, a major player in the cryptocurrency world, stating that it has become a preferred payment method for money launderers and fraudsters, particularly in the vibrant and rapidly evolving landscape of Southeast Asia.

Southeast Alarming rise as a money laundering tool

A recent report sheds light on how Tether’s crypto token, also known as tether, is central to some scams that include deceptive romantic schemes aimed at gaining victims’ trust and ultimately leading to significant financial transfers. This tactic is colloquially referred to as “pig butchering.”

The acceleration of money laundering activities through Tether, driven by the combination of cryptocurrency evolution and rapid technological advancements. Southeast Asia’s organized crime groups, traditionally associated with black market casinos for laundering illicit funds, have seamlessly integrated cryptocurrency, especially Tether, into their operations.

Southeast Asia’s criminal ecosystem supercharged by Tether

The role of online gambling platforms are highlighted, particularly those operating illegally.  Popular channels for cryptocurrency-based money launderers, indicate a significant uptick in the usage of Tether for such illicit activities.

Jeremy Douglas from the UN’s office on Drugs and Crime stresses that organized crime has ingeniously established a parallel banking system using new technologies. He points out that the proliferation of loosely or entirely unregulated online casinos, coupled with the use of cryptocurrencies like Tether, has effectively supercharged the criminal ecosystem in the region.

Tether’s challenges

Tether, with its digital token classified as a stablecoin, operates as a cryptocurrency pegged to the US dollar, facilitating smoother transitions between traditional and crypto trades. However, its prominent role in money laundering activities has attracted regulatory scrutiny and enforcement crackdowns. The report details instances where authorities have successfully dismantled money laundering networks, recovering substantial amounts of Tether funds. Despite a broader crackdown on digital assets, Tether’s token continues to be embraced by criminal groups, with some casinos even specializing in handling this particular cryptocurrency.

Prevention of illegal use

Tether has initiated collaboration with US authorities to prevent illicit use of its token, leading to a notable increase in blacklisted Tether wallets. Nevertheless, the cryptocurrency remains under regulatory scrutiny for its asset management practices and ties with financial institutions. In 2021, the Commodity Futures Trading Commission (CFTC) in the US accused Tether of making misleading statements about having sufficient dollars to back its stablecoin, resulting in a $41 million fine paid by Tether without admitting liability.

Cryptocurrency regulation

The disclosure of Tether’s deposit exceeding $1 billion with a subsidiary of Britannia Financial Group, coupled with allegations against the founder in a purported bribery scheme, have compounded the regulatory challenges faced by the cryptocurrency.

The UN report stands as a stark warning, underlining the immediate necessity for improved regulations around cryptocurrencies. This is particularly crucial in areas where vulnerabilities are exploited by organized crime groups to conduct illicit activities using cryptocurrencies such as Tether.


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