Tether would like nothing more than to shed its image as a go-to means for washing dirty money.
But that’s hard to do when your top product — USDT, the world’s top stablecoin — keeps popping up in federal indictments.
On Thursday, US prosecutors in New York unsealed an indictment charging Maximillien de Hoop Cartier and five other individuals with laundering $14.5 million in USDT from drug trafficking, specifically cocaine and cocaine paste.
Cartier jewellery family
Authorities charged Cartier, which prosecutors called a “purported” member of the famous jewellery family, with five criminal counts, including conspiracy to commit money laundering and bank fraud.
The individuals were members of a network of shell companies in Colombia and the US to launder money generated from the drug trade.
Between May and November 2023, $14.5 million was allegedly laundered using Tether’s stablecoin.
A Tether spokesperson said that the firm cannot comment on active cases.
On Thursday, announced that it would use Chainalysis’s chain-sleuthing services to clean up such problems.
The blockchain forensics firm is one of the first and largest services to monitor illicit crypto use, boasting more than $81 million in contracts from the US government.
Chainalysis has created a customisable tool to monitor USDT’s use on secondary markets—activity on other blockchains or exchanges outside Tether’s control. The tool includes a sanctions-monitoring feature and an illicit transactions detector.
New tool
A Tether spokesperson told DL News that the tool was “a significant advancement” in its ability to monitor illicit activity involving the stablecoin. It expects to increase its investigation team’s “efficiency and scope” with the new tool.
The company has already frozen USDT on the secondary markets. In 2023, Tether froze nearly $900,000 linked to donations to Hamas and illicit activity in Ukraine. It also froze $225 million in USDT tied to crypto romance scams.
USDT is Tether’s dollar-pegged cryptocurrency worth more than $110 billion, according to Coingecko.
Chainalysis is well known for its work with federal agencies to snuff out illicit use of cryptocurrencies — something Tether could use a hand with.
Dark money and illicit ties
A UN report earlier this year said USDT had become “the preferred choice” for $17 billion Southeast Asian crime rackets. The dollar-pegged cryptocurrency is worth more than $110 billion, according to CoinGecko.
Last week, Venezuela’s state-backed oil company (PDVSA) accelerated its use of USDT to skirt new US sanctions.
At the time, a Tether spokesperson told DL News it would stop sanctioned entities from using the stablecoin. It did not comment specifically on PDVSA’s use of USDT.
Despite ties to sanctioned companies and the drug trade, the stablecoin firm continues to rake in profits.
In the final quarter of 2023, it generated $2.8 billion, and last quarter, it earned more than $4.5 billion.
Liam Kelly is DL News’ Berlin correspondent. Contact him at liam@dlnews.com.
