Tether Defends Its Stablecoin Against UN Report Linking It to Illicit Activity
Tether, the company behind the world’s largest stablecoin USDT, has issued a statement challenging a report by the United Nations (UN) that accused its token of being a major tool for money laundering and underground banking in East Asia and Southeast Asia.
The report, published by the UN Office on Drugs and Crime (UNODC) on Monday, claimed that online gambling platforms, especially those operating illegally, have become the most popular vehicles for cryptocurrency-based money launderers, particularly for those using Tether or USDT on the TRON blockchain.
The report also cited several cases of USDT being used for illicit purposes, such as human trafficking, pig butchering, cyber fraud, and ransomware. It said that authorities in the region reported USDT as one of the most popular cryptocurrencies used by organized crime groups.
Tether, however, said that the report was “misleading” and “unfairly” singled out its stablecoin, while ignoring its role in helping developing economies in emerging markets, where access to traditional financial services is limited or costly.
Tether also said that the report failed to acknowledge its record of collaborating with global law enforcement agencies, including the Department of Justice, the Federal Bureau of Investigation, and the United States Secret Service, to combat financial crime and freeze funds involved in illicit activity.
Tether said that it had frozen more than $300 million in USDT in the last few months, including $225 million connected to a Southeast Asia-based human trafficking and pig butchering syndicate in November 2023, as part of a U.S. investigation.
Tether called on the UN to engage in a constructive dialogue and to educate itself on the benefits and challenges of blockchain technology and stablecoins. Tether said that its token offers unparalleled transparency and traceability, surpassing traditional banking systems that have been the vessel for laundering substantial sums for decades.
Tether’s USDT is a stablecoin that is pegged to the U.S. dollar, meaning that each USDT is supposed to be backed by one dollar in reserve. However, the company has faced scrutiny and lawsuits over its claims of full backing and its reserves’ composition and safety.
Tether’s USDT reached a record supply of nearly $95 billion in January 2024, making it the most widely used stablecoin in the crypto market. However, it was also criticized by S&P Global Ratings for being worse than its rivals at maintaining its peg to the dollar.
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