The 3 Big T's Unite to Fight USDT Crimes

Tether, the leading stablecoin issuer, has joined forces with Tron, a major blockchain platform, and blockchain intelligence firm TRM Labs to launch the T3 Financial Crime Unit (T3 FCU).

This pioneering public-private partnership aims to combat illicit activities involving USDT on the TRON blockchain.

A 2023 report from TRM Labs highlighted that nearly 45% of all illicit crypto volume occurred on the Tron blockchain, a notable increase from 41% in 2022.

In response, Tron, founded by Justin Sun, collaborated with TRM Labs and Tether to address this growing threat.

The increasing prominence of Tether and Tron in the crypto space has unfortunately made them targets for scammers, terrorist financiers, and other bad actors.

Over 50% of USDT's circulating supply operates on the Tron blockchain, which is favoured for its high throughput and low transaction costs, attracting both legitimate users and malicious entities.

The release reads:

“The same features that make USDT on TRON attractive to legitimate users — low fees, lack of volatility, and ease of use — have also drawn the attention of scammers, terrorist financiers, and other threat actors.”

Sun noted:

“TRON originated with the belief that technology can be used for good and to empower people across the globe. By collaborating with TRM Labs and Tether, TRON is helping to ensure that blockchain technology is used to make our world a better place, and sends a clear message that illicit activity is not welcome in our industry.”

Currently, Tether has $60.7 billion in USDT issued on Tron, compared to $53.9 billion on Ethereum and $712 million on Solana.

The T3 FCU has already made strides in its mission, freezing $12 million in USDT linked to blackmail scams and investment fraud.

Paolo Ardoino, CEO of Tether, expressed:

“At Tether, safeguarding the integrity of the blockchain ecosystem is a top priority and a responsibility we embrace with being a key player in the digital asset space. This commitment drives us to take proactive measures in helping maintain the security and trustworthiness of the ecosystem. We're proud to have worked with TRM Labs and TRON in this pioneering effort. This collaboration underscores our dedication to joining with industry leaders and law enforcement to combat illicit activity, ensuring a secure environment for all users.”

Tether is the Currency of Choice by Terrorist Financing Entities

TRM Labs also reported that scams and fraud accounted for approximately one-third of all crypto crimes last year, with Tether’s USDT playing a significant role in terrorist financing on Tron.

In 2023, Tether (USDT) on the TRON blockchain emerged as the preferred currency for terrorist financing, with a significant 125% increase in TRON addresses linked to such activities, compared to just a 12% rise in Bitcoin addresses.

This trend raises important questions about why Tether on TRON is favoured by these entities.

Factors likely contributing to this preference include TRON's low transaction fees, the stable value of USDT, and an outdated belief that transactions on this blockchain are harder to trace.

Goal is to Push Illicit Crypto Volume to Zero

TRM Labs will leverage its intelligence suite to assist Tron and Tether in analysing blockchain activity and identifying suspicious patterns.

Although the total volume of illicit crypto transactions remains low, TRM Labs aims to reduce it to zero.

Chris Janczewski, head of global investigations at TRM Labs, said:

“As adoption of stablecoins continues to rise, it's critical that key industry players proactively evolve their capabilities to combat illicit activity and ensure a safe and secure environment.”

Forbes reported in January that USDT has become a "preferred choice" among money launderers and scammers, citing a publication from the United Nations Office on Drugs and Crime (UNODC).

Tether challenged the report, emphasizing its positive role in supporting developing economies in emerging markets.

These concerns highlight the significance of initiatives like the T3 Financial Crime Unit, particularly as legal and regulatory scrutiny of digital assets intensifies.

This unit also underscores Tether's commitment to combating cybercrime.

Drop in Crypto Crimes But Higher Than Existing Industry Estimates

The reduction in various categories of crypto crime throughout 2023 was a positive development for those striving to create a safer financial system for billions of cryptocurrency users.

Notably, the decline in illicit fund volumes outpaced the overall contraction of the crypto market during the bear phase.

However, TRM Labs observed that, while the proportion of illicit funds in relation to total crypto value decreased, it remained significantly higher than industry estimates.

As Bitcoin and other cryptocurrencies approach or exceed previous highs, the incentives for criminal exploitation may grow.

Additionally, escalating geopolitical tensions in the Middle East, Asia, and the former Soviet Union could embolden hackers and other threat actors.

In this context, vigilance and collaboration among crypto businesses, blockchain analytics firms, governments, and international organizations are more critical than ever in understanding and combating crypto crime.