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Tether's founders may have created USDT as a tool for financial inclusion and an entry point into the crypto market, but the stablecoin ended up taking money out of control. This is what The Economist writes .
The arrest of a courier carrying £250,000 by British police in November 2021 exposed a large-scale money laundering scheme. Its organizer was Ekaterina Zhdanova from the Russian Federation.
An international investigation by law enforcement agencies from Europe, the Middle East, and the United States called Operation Destabilise revealed that the Tether coin served as the infrastructure base for Zhdanova's operations. The entrepreneur received cryptocurrency by helping ransomware operators cash out their proceeds.
The businesswoman's team collected cash from criminals from the sale of drugs and other illegal goods across Western Europe. In the UK alone, this amounted to £12 million in 2022-2023.
Couriers then delivered the money to Russian oligarchs, intelligence officials, propaganda agencies and expats who, due to sanctions, were deprived of the opportunity to use traditional financial channels. Recipients paid Zhdanova from their bank accounts in the Russian Federation.
The entrepreneur repaid the debt to clients through transactions in USDT. The stablecoin allowed almost instant movement of any amount between digital wallets with small fees and without the control of regulatory authorities.
[td]"Individually we knew about many of the elements of this money laundering activity. But I think Operation Destabilise brings it all together and you can see how this global system works. And that's new to us, really," said William Lyne, head of cyber intelligence at the National Crime Agency.[/td]According to law enforcement, the efficiency of USDT made the scheme very cheap to use. While traditional launderers charge at least 10% of the amount, Zhdanova charged less than 3%.
Tether's cooperation with law enforcement was deemed "strange"
In January 2024, UN experts stated that the stablecoin had become one of the tools used by scammers and money launderers.
In October, The Wall Street Journal learned of an investigation by the US authorities into Tether for possible violations of sanctions and AML rules. The company's CEO Paolo Ardoino denied the publication's information.
Tether has repeatedly emphasized its cooperation with law enforcement agencies from various jurisdictions. The company regularly blocks assets on suspicion of illegal activity. According to the statement, the volume of frozen funds has already reached $2.5 billion.
In 2024, Tether partnered with security firm Chainalysis to create a system for monitoring activity on the USDT secondary market.
Together with Tron and TRM, the stablecoin issuer formed a “financial crime unit” — T3. Speaking about the results of the structure’s work, Ardoino said that its team of “20 or 30” employees froze USDT worth tens of millions of dollars at the request of law enforcement.
However, in traditional financial institutions, compliance activities are disproportionate in scale, The Economist noted. A large bank like HSBC employs thousands of workers in such departments. Tether attracts up to 40 million new clients every quarter, and the 20-30 specialists at T3 do not have the physical ability to check the integrity of each one, the journalists emphasized. Given the speed of blockchain transactions, all that the team can really do in the event of an investigation is to describe the exact path of funds after the fact, they are sure.
The Economist also considered the company’s approach to cooperation with the authorities “strange”. According to Ardoino, requests from the United States are given priority, while requests from "tyrannical countries" are usually ignored.
[td]"But financial institutions should not be able to pick and choose which countries to help with information. If they operate in a territory, they are subject to the rules that apply there," the publication believes.[/td]The problem for authorities is that Tether, headquartered in El Salvador, operates in a “supranational cloud,” making it difficult to compel the company to provide data. The issuer’s management is usually extremely sensitive to criticism of the use of USDT in illegal schemes, and law enforcement avoids the topic for fear of losing cooperation.
[td]"Stablecoins are a money launderer's dream. But we don't want to talk about it publicly, so as not to spoil relations with Tether," a representative of one of the agencies confirmed.[/td]Recall that in May, the New York prosecutor's office brought charges of laundering drug trafficking proceeds through USDT against the heir to the Cartier jewelry house and five Colombian citizens.
The arrest of a courier carrying £250,000 by British police in November 2021 exposed a large-scale money laundering scheme. Its organizer was Ekaterina Zhdanova from the Russian Federation.
An international investigation by law enforcement agencies from Europe, the Middle East, and the United States called Operation Destabilise revealed that the Tether coin served as the infrastructure base for Zhdanova's operations. The entrepreneur received cryptocurrency by helping ransomware operators cash out their proceeds.
The businesswoman's team collected cash from criminals from the sale of drugs and other illegal goods across Western Europe. In the UK alone, this amounted to £12 million in 2022-2023.
Couriers then delivered the money to Russian oligarchs, intelligence officials, propaganda agencies and expats who, due to sanctions, were deprived of the opportunity to use traditional financial channels. Recipients paid Zhdanova from their bank accounts in the Russian Federation.
The entrepreneur repaid the debt to clients through transactions in USDT. The stablecoin allowed almost instant movement of any amount between digital wallets with small fees and without the control of regulatory authorities.
Tether's cooperation with law enforcement was deemed "strange"
In January 2024, UN experts stated that the stablecoin had become one of the tools used by scammers and money launderers.
In October, The Wall Street Journal learned of an investigation by the US authorities into Tether for possible violations of sanctions and AML rules. The company's CEO Paolo Ardoino denied the publication's information.
Tether has repeatedly emphasized its cooperation with law enforcement agencies from various jurisdictions. The company regularly blocks assets on suspicion of illegal activity. According to the statement, the volume of frozen funds has already reached $2.5 billion.
In 2024, Tether partnered with security firm Chainalysis to create a system for monitoring activity on the USDT secondary market.
Together with Tron and TRM, the stablecoin issuer formed a “financial crime unit” — T3. Speaking about the results of the structure’s work, Ardoino said that its team of “20 or 30” employees froze USDT worth tens of millions of dollars at the request of law enforcement.
However, in traditional financial institutions, compliance activities are disproportionate in scale, The Economist noted. A large bank like HSBC employs thousands of workers in such departments. Tether attracts up to 40 million new clients every quarter, and the 20-30 specialists at T3 do not have the physical ability to check the integrity of each one, the journalists emphasized. Given the speed of blockchain transactions, all that the team can really do in the event of an investigation is to describe the exact path of funds after the fact, they are sure.
The Economist also considered the company’s approach to cooperation with the authorities “strange”. According to Ardoino, requests from the United States are given priority, while requests from "tyrannical countries" are usually ignored.