Tether is used by criminals way more than you think

There have been repeated reports of billions of dollars worth of Tether being laundered in the wake of pig slaughter and sextortion scams, and the problem is getting worse, not better.

A detailed new report has revealed how the USDT stablecoin is widely used as a payment method in the criminal market, with illicit wallets receiving more than $11 billion over the past three years.

Source: Elliptic

Blockchain analytics firm Elliptic says Tether is the primary payment method for a platform called Huione Guarantee, which facilitates transactions on behalf of cybercriminals and their customers.

Some traders claim they can help with money laundering, particularly when it comes to ill-gotten gains from pig slaughtering, while others say they are willing to deal with proceeds from sextortion scams.

For those who don’t know, pig slaughtering scams involve scammers slowly gaining the trust of unsuspecting individuals, usually by pretending to be in a romantic relationship, and encouraging them to invest their entire life savings in crypto investments that are too good to be true.

Through Huione Guarantee, it’s even possible to hire people to create websites for these fake investment opportunities and obtain “AI face-swapping” software so the scammers can convincingly communicate with their prey.

Source: Elliptic

Countless billions of dollars have been lost in pig slaughter scams, but it’s easy to overlook the fact that the people tasked with perpetrating these crimes are often the victims themselves. They often travel to Southeast Asian countries like Cambodia and Myanmar in the hope of high-paying jobs, only to have their passports confiscated and be thrown in jail.

Creepily, Huione Guarantee also sells products to torture these workers, such as shackles that deliver electric shocks and batons to beat them.

“Some of these forced labourers commit suicide or die in suspicious circumstances,” the Elliptic investigation warned.

Source: Elliptic

The authors pointed to “overwhelming evidence” that Huione Guarantee’s “predominant role is to act as an illicit marketplace.” And in another surreal twist, the platform was found to have connections to a major Cambodian firm involved in everything from airlines to real estate, and one of its executives was closely related to the country’s prime minister.

While the report shows the extent of the pig slaughter scam in a new light, Elliptic said one of the benefits of crypto payments is the “transparency of the blockchain,” with USDT flows being tracked and frozen to prevent scammers from making a profit.

“As a result of our investigations, hundreds of cryptocurrency addresses controlled by Huione companies and used by traders trading under the Huione Guarantee were tagged in Elliptic instruments,” it said.

Restrictions continue

There is also growing evidence that Tether is being used to facilitate criminal activity in China, where the use of cryptocurrencies is banned.

In May, a major underground gang that allowed people to send money abroad in violation of strict foreign exchange rules was dismantled by police, with $1.9 billion transferred abroad, according to local media reports.

The United Nations also shed light on the issue in January, with Justin Sun claiming that USDT on the TRON blockchain has “become a preferred option for regional cyber fraud operations and money launderers due to its stability, convenience, anonymity and low transaction fees.”

Over a 12-month period, more than $17 billion worth of Tether was allegedly “connected to underground currency exchanges, illicit commodity trading, unlawful collection and payment processes, and various criminal activities.”

There is also increasing evidence that kidnappers are demanding USDT as ransom. Two unemployed women shamelessly kidnapped a three-year-old child from a shopping mall in Hong Kong and then left a note for his mother ordering her to pay $640,000 worth of Tether into a wallet. The criminals were later arrested and the child was thankfully unharmed.

According to a recent TRM Labs report, Tether was by far the stablecoin with the most illicit volume — estimates suggested that 1.63% of transactions were linked to criminal activity. In comparison, that figure fell to just 0.05% of transactions involving USDC.

This has also had consequences when it comes to the financing of terrorism; while cryptocurrency exchanges and payment processors have begun to crack down in recent years, TRON remains popular.

“Amid terrorist financing campaigns that continue to accept cryptocurrencies, the number of unique TRON addresses receiving Tether (USDT) has increased by 125%,” the report said.

A Tether spokesperson told Bloomberg regarding these allegations:

“Historical evidence repeatedly shows that transactional figures are often exaggerated and actual values ​​significantly inflated due to a misinterpretation of data based on the assumption that if a service receives a small fraction of the illicit funds, all funds in the service are illicit.”

Connecting