Reports have revealed that billions of dollars in Tether have been laundered through pig butchering and sextortion scams, highlighting an escalating problem. Investigations by blockchain analytics firm Elliptic indicate that the USDT stablecoin is extensively used as a payment method in various cybercriminal marketplaces.
The in-depth report by Elliptic disclosed that illicit wallets received over $11 billion in USDT over the past three years. The platform Huione Guarantee is primarily used for these transactions, aiding cybercriminals and their clients. Some merchants offer money laundering services, particularly for funds obtained through pig butchering and sextortion scams.
Pig butchering scams involve fraudsters gaining victims’ trust by posing as romantic interests and persuading them to invest their life savings in fake crypto ventures. Huione Guarantee even facilitates the creation of fake investment websites and provides "AI face changing" software to ensure successful communication for scammers.
The shackles of such scams often trap not just the victims, who lose significant sums, but also those coerced into carrying out these scams. Many people are lured to Southeast Asia with promises of lucrative jobs, only to find themselves imprisoned and tortured. Huione Guarantee also sells implements for torturing these workers, leading some to resort to suicide or face suspicious deaths.
Elliptic’s investigation found "overwhelming evidence" that Huione Guarantee functions as an illicit marketplace. Shockingly, the platform is linked to a prominent Cambodian firm with diverse interests and political connections.
While the transparency provided by blockchain technology allows for the monitoring and freezing of illicit funds, making it harder for scammers to operate, the report emphasizes that crypto crimes are proliferating.
Clampdowns continue
Evidence of Tether’s involvement in criminal activities is also emerging in China, where cryptocurrencies are banned. In May, a large underground network moving $1.9 billion overseas was dismantled by Chinese authorities. The United Nations has noted USDT’s popularity for regional cyberfraud and money laundering.
Estimates last year suggested over $17 billion in Tether was tied to unlawful activities, including currency exchanges and illicit trade. Tether has even been demanded in ransom situations, such as a kidnapping case in Hong Kong where the abductors demanded $640,000 worth of USDT.
A report by TRM Labs highlighted that Tether tops the list for illicit stablecoin activities, with 1.63% of trades linked to criminal actions, significantly surpassing USDC’s 0.05%. This involves not only fraud but also financing terrorism, where TRON blockchain remains favored despite efforts to curb its use.
Tether has disputed these reports, stating:
“Historical evidence repeatedly shows that transactional figures have often been exaggerated due to a misinterpretation of data that assumes that if a service receives some small portion of illicit funds, then all funds in the service are illicit, significantly inflating the actual values.”
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