Bitrace Report Highlights Diverse Methods of Money Laundering via Stablecoins

Crypto News- Recently, Bitrace, a blockchain research firm, unveiled a comprehensive report delving into the intricate dynamics of money laundering within the stablecoin realm, with a specific focus on Tether (USDT). The findings, as presented in a translated report featured on Medium by Wu Blockchain on December 26, cast light on the various maneuvers employed by nefarious entities seeking to exploit stablecoins for illicit financial activities.

Bitrace Report Highlights Diverse Methods of Money Laundering via Stablecoins

In the ‘upward’ trajectory, money launderers engage in selling a stablecoin to accomplices at prevailing market rates, only to subsequently repurchase another stablecoin at an artificially inflated price. The differential amount serves as compensation for the rendered money laundering services. Notably, the report suggests that these illicit USDT transactions may place the stablecoin’s value in the range of 8-10 Chinese yuan (RMB), considering that 7 RMB equates to 0.98 United States dollars as per the report’s timeframe.

Tether and Money Laundering: Bitrace Report Highlights Concerns

Conversely, in ‘downward’ transactions, stablecoins become instrumental for seemingly legitimate purposes on platforms lacking robust Anti-Money Laundering/Know Your Customer (AML/KYC) protocols. The report outlines diverse scenarios, including the utilization of proxy payment platforms that accept USDT deposits to facilitate user transactions across various domains such as online gambling, fund platforms, live broadcasting gifts, e-commerce transactions, and even payroll disbursements.

The inherent weak AML/KYC verifications on these platforms provide ‘downward’ stablecoin sellers with a diminished risk of encountering ‘reverse freezing,’ a mechanism aimed at freezing accounts associated with criminal cases. Consequently, USDT may be sold at a discounted rate ranging from 0.05 to 0.3 RMB in these instances.

Bitrace substantiates its findings by tracing USDT transactions frozen by Tether and the OKX platform. The identified criminal groups strategically leverage well-known cryptocurrency trading platforms like FTX and Binance, alongside OKX, facilitating the transfer of stablecoins to more centralized trading, payment, and even online gambling platforms.