Tether, the issuer of the USDT stablecoin, has witnessed a substantial increase in its share of the global stablecoin supply, surging from 50% to 71% throughout 2023, as reported by The Block. The company recently achieved a significant milestone by exceeding 95 billion stablecoins in circulation, surpassing the GDPs of nations like Guatemala and Bulgaria combined. In contrast, its primary competitor, Circle’s USD Coin (USDC), lags with a circulation of 27 billion tokens, down from 48 billion at the beginning of the year.
UN Warns Of Tether’s Dark Side
However, amidst Tether’s success, recent reports indicate that the cryptocurrency platform has become a preferred tool for money launderers and fraudsters in Southeast Asia, according to a warning from the United Nations. The UN’s Office on Drugs and Crime released a report revealing that Tether’s crypto token is at the epicenter of a burgeoning industry of scams, including tactics such as the “pig butchering” strategy, where criminals engineer false romantic connections to exploit victims.
Jeremy Douglas of the UN’s Office on Drugs and Crime expressed concern about the rise of a parallel banking system facilitated by organized crime through new technologies, particularly within the loosely regulated online casino sector in Southeast Asia. The report emphasized the symbiotic relationship between online gambling platforms, illegal ones in particular, and Tether-based money laundering.
Despite the company being a stablecoin pegged to the US dollar, providing stability in cryptocurrency trading, the UN report reveals that authorities have uncovered various money laundering networks dealing in illicit Tether funds. Singaporean authorities dismantled an operation last August, recovering $737 million in cash and crypto.
Erin West, a criminal prosecutor and cybercrime expert, explained that Tether’s appeal to criminals lies in its promise of fast, irreversible transactions on the blockchain. West highlighted the challenges victims face, blinded by love and enticed by the prospect of quick wealth through unfamiliar cryptocurrency investments.
While there has been a broader crackdown on digital assets in the US and other regions, the company continues to be embraced by criminal groups for moving funds due to the perceived lack of effective cryptocurrency regulations. Tether’s token has become so ingrained in illicit activities that some casinos now specialize in handling it, further exacerbating concerns about the growing role of Tether in facilitating criminal transactions.
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