Cybercriminals Exploiting USDT to Funnel Illicit Funds in India
Reports from the Indian state of Rajasthan have revealed a disturbing trend where cybercriminals are using stablecoins like USDT to funnel illicit funds to scam operators outside the country. Local law enforcement in Rajasthan has recently made several arrests of money mules involved in converting over INR 1 crore (approximately $115,546) into Tether (USDT) before sending it to international cybercriminal networks.
Superintendent of Police Arshad Ali disclosed that the funds, obtained through digital scams such as “digital arrest” frauds, were funneled through local mules into cryptocurrency and then sent to exchanges based in Dubai and France. It is believed that the masterminds behind these scams are operating from these countries.
The modus operandi of these cybercriminals involves acquiring bank accounts, ATM cards, mobile phones, and SIM cards from locals to deposit illicit funds on local crypto exchanges. During a recent arrest, law enforcement recovered four mobile phones and eight SIM cards from the suspects, which were linked to their crypto laundering activities.
Crackdown on USDT Money Laundering
Authorities had previously dismantled a similar money laundering ring that utilized USDT, resulting in the arrest of 15 suspects. USDT, being the largest stablecoin by market capitalization, is a favored choice for scammers due to its stability, liquidity, and pseudo-anonymity. However, Tether has faced criticism for enabling illegal activities and aiding in circumventing international sanctions.
To address these concerns, Tether announced in May 2024 that it was collaborating with Chainalysis to develop a transaction monitoring platform to track secondary market activity and identify suspicious transactions. Subsequently, in September, the stablecoin issuer partnered with blockchain network Tron and TRM labs to establish the T3 Financial Crime Unit, aimed at monitoring illegal activities involving USDT on the Tron network.
As cybercrime continues to evolve, it is crucial for law enforcement agencies and cryptocurrency platforms to work together to combat illicit activities and protect users from falling victim to scams. The use of stablecoins like USDT in money laundering schemes highlights the importance of implementing robust security measures and regulatory oversight in the crypto space.