Tether (USDT): A Cryptocurrency Often Probed For Use In Money Laundering

Anti-Money Laundering Office (AMLO) officials are investigating whether iCon Group laundered funds through the stablecoin 247 million USDT, a cryptocurrency worth more than 8 billion baht.

After executives of the direct sales firm were arrested and its assets were seized, investigators discovered a suspicious transfer of USDT.

Cryptocurrency is frequently used for money laundering because it can be quickly converted from cash to cryptocurrency and then back to cash or another asset by paying in crypto to launder the funds.

USDT, also known as Tether, is a cryptocurrency that is frequently investigated for use in money laundering, particularly in Asian and Southeast Asian countries. According to a UN report published in January this year, USDT's ease of remittance, privacy and low fees make it popular among criminals, and it is generally used for online gambling and by casinos.

Stablecoins, such as USDT, are a type of cryptocurrency that is designed to have a stable value, typically pegged to a fiat currency like the US dollar, gold or other assets.

Launched by Tether Inc in 2014, Tether is the largest stablecoin by trading volume, holding 70% of the market share. As of July 2024, Tether has more than 350 million users worldwide.

However, the stablecoin has faced criticism regarding the transparency and verifiability of its claimed fiat reserves.

Stablecoins offer several benefits, including allowing holders to avoid the volatility of crypto and making international money transfers or trading as a crypto asset more convenient.

Transferring money or making international transactions using dollars can be slow and more expensive than using stablecoin because it has to go through financial intermediaries such as banks or the Society for Worldwide Interbank Financial Telecommunication system. Therefore, entrepreneurs are increasingly turning to international money transfers via crypto.

According to crypto advocates, the main differences between international money transfers via crypto and the US dollar are:

- Stable value: Stablecoin is designed to have a value equivalent to the dollar (or other assets), while the dollar is influenced by governments and global markets.

- Decentralisation: Stablecoin can be transferred via a blockchain system without an intermediary organisation, making it faster and cheaper, while the dollar still needs to go through the traditional banking process.

- Usage in the digital world: Stablecoin can be used in the crypto world, such as trading digital assets or using DeFi (decentralised finance) platforms, while the greenback is used in the real-world economy.

Traditional cryptocurrencies like Bitcoin or Ethereum (ETH) tend to be highly volatile, whereas a stablecoin pegged to the dollar allows users to hold digital assets without worrying about sudden value changes, making it a more reliable tool for transferring money and saving within the crypto ecosystem.

Moreover, stablecoins such as USDT or USDC, another crypto stablecoin pegged to the dollar and managed by Circle, serve as an important bridge between traditional financial systems and the crypto world. By having their value pegged to the dollar, users can easily transfer or convert stablecoins to cash or other digital assets. This reduces the friction and fees associated with currency conversions and international money transfers.

Stablecoins also play a key role in DeFi platforms that allow users to borrow, lend or enter into financial contracts without going through an intermediary, such as a bank. The stability of stablecoins enables users to make financial transactions without being exposed to crypto volatility in the process.

In everyday life, stablecoins can act as digital cash. Users can purchase goods and services across multiple platforms using stablecoins. This increases transaction efficiency and reduces reliance on banks or traditional financial systems.

"Whether a transaction is money laundering depends on the purpose of the transfer. It is not money laundering in all cases," said a source familiar with crypto transactions who requested anonymity.

According to the source, blockchain technology enables the verification and tracking of USDT transactions in a transparent manner using a tool called a blockchain explorer, such as Etherscan or Tronscan, to view information about transactions, such as wallet addresses that send and receive USDT.

The first step in the money laundering process using USDT is to place the money to be laundered into a layering system, followed by making fake transactions via transfers back and forth to make it difficult to track, and finally mixing grey money with clean money.

The final step is integration, which means converting the money into other assets, mostly luxury products such as branded bags, luxury cars or land, said the source.

The USDT needs to be converted to other assets because even though USDT is a popular digital currency, it still has limitations maintaining its value in the long term because it does not have a mechanism to resist inflation.

"Converting USDT into valuable assets is one way to maintain the value of capital in the long term," said the source.

To track USDT transfers, people need the knowledge and skills to investigate and ownership of a digital wallet, said the source.

"Even if you know where the destination is, you cannot know who owns the