UN Warns That Tether is the Preferred Financial Choice for Scammers, Criminals
Last February, our colleagues at CoinGeek asked the question: "Is Tether a scam?"
Gavin Lucas advised to "think twice before using Tether".
He went even further.
"At CoinGeek, we’ve been yelling from the rooftops for years that Tether is a scam and will someday cause the biggest crash in the history of the digital currency industry."
This isn't just Lucas spouting conspiracy theories. He points to a serious lack of transparency.
"Tether claims it is backed by commercial paper, but it won’t reveal any details. Investigators like Bitfinex’ed on Twitter have repeatedly pointed out that there’s no legitimate reason for Tether to hide this information. Its claims that this obfuscation gives it some competitive edge are nonsensical."
Ignore the UN warning and CoinGeek's reporting at your own peril. CoinGeek, you'll recall, uncovered the seedy ties to FTX Exchange long before that business became the poster child for crypto skulduggery.
Tether, we would note, is offered at many of today's online gambling sites as a means of depositing funds and receiving payouts.
It takes the gamble out of gambling in that more popular cryptocurrency payouts like Bitcoin can fluctuate drastically during the payout process. As such, customers can realize gains or losses once the transaction is confirmed on the blockchain. Even though the time between a request, payment sent, confirmation and selling on the exchange can often take under two hours, that's still plenty of time for the price of bitcoin to shift in either direction by a few percentage points, especially during times of volatility. Likewise, we've seen periods when the entire process can take upwards of six hours.
Tether (USDT) is the largest stablecoin by market capitalization. The value of USDT is pegged to the U.S. dollar. This means if you request a $500 payout, you'll likely end up with $500 minus fees once all is said and done.
But now the United Nations is sounding the alarm.
Forbes this week referred to what it calls "five key facts" related to Tether.
- Tether has fast become the platform of choice for money laundering and fraud operations across East and Southeast Asia, the United Nations Office on Drugs and Crime (UNODC) warned in a report on organized crime and illicit banking in the region.
- Tether, which did not immediately respond to Forbes’ request for comment, is a company that runs a blockchain platform and issues digital tokens pegged to real-world currencies with the backing of its own financial reserves, most notably USDT, or tether, which is tied to the U.S. dollar one-for-one.
- The agency said tether’s stability, ease of use, anonymity and low transaction fees has helped the digital token become a “preferred choice” for fraudsters and money launderers alike and intelligence agencies across the region say tether ranks “among the most popular cryptocurrencies” used by organized crime groups.
- Its popularity is illustrated by the “surging volume” of cyber fraud, money laundering and underground banking cases, the UN said, including schemes like “sextortion,” a form of blackmail threatening to post sexual content or information about a person, and “pig butchering,” a socially engineered romance designed to “fatten up” targets before extracting money.
- The UN said financial authorities and law enforcement have reported a rapid uptick in the use of “sophisticated, high-speed money laundering” teams specializing in tether in recent years, with criminals advertising their services on social media platforms like Facebook, TikTok and Telegram.
Online gambling platforms in particular have “emerged as among the most popular vehicles for cryptocurrency-based money launderers,”—especially those using tether—the report said, warning they are “fueling the intensification” of the region’s “rapidly growing illicit digital economy.”
- Aaron Goldstein, Gambling911.com
