Technology

‘Stablecoins’ Facilitated $40 Billion in Crypto Crime Since 2022

Tether’s Response

When WIRED reached out to Tether Holdings, the company responded by stating that it proactively collaborates with global law enforcement agencies to identify and prevent illicit use of its cryptocurrency. Tether argued that it has contributed to freezing the assets of users involved in scams or violating sanctions lists. The company also emphasized the transparent nature of blockchain transactions, which allows for every transaction to be easily traced.

Denial of Reports

Tether Holdings has flatly denied reports of its use in crime and sanctions evasion. The company stated that there is no evidence of Tether violating laws through inadequate customer due diligence or screening practices. It also emphasized that the October Wall Street Journal article was based on highly erroneous interpretations of data.

Tether’s Freeze Capability

In contrast to most cryptocurrencies, Tether has the capability to freeze user funds. The company stated that since its launch in 2014, it had frozen $835 million in funds tied to illicit activities. Tether emphasized its ethos of transparency, compliance, and collaboration with relevant authorities worldwide.

Impact of Tether’s Efforts

Chainalysis’ Fierman noted that Tether’s efforts to freeze criminal funds are having an impact, and more enforcement could help end stablecoins’ exploitation by criminals. However, illicit use of stablecoins has so far dwarfed those seizures, suggesting that Tether has not yet solved the underlying problem.

Prosecutor’s Perspective

Prosecutor Erin West acknowledges and applauds Tether’s efforts to freeze criminal assets but emphasizes that the issue of billions of dollars in assets moving is just one piece of the puzzle. The bad actors in this scenario are still ahead of law enforcement efforts.

Conclusion

In conclusion, Tether Holdings has responded to reports of its cryptocurrency’s use in illicit activities by emphasizing its proactive collaboration with law enforcement, transparency, and compliance efforts. While Tether has been able to freeze funds tied to illicit activities, the scale of illicit use suggests that more enforcement and strategies are needed to address the underlying issue.

In conclusion, the rise of stablecoins has undoubtedly revolutionized the world of cryptocurrency, providing a more stable and reliable digital asset for users. However, the alarming increase in crypto crime associated with stablecoins cannot be ignored. The ease of transferring large sums of money across borders, combined with the anonymity of transactions, has made stablecoins an attractive tool for illegal activities. It is crucial for regulators and industry stakeholders to address the vulnerabilities and risks associated with stablecoins in order to ensure the safety and integrity of the cryptocurrency market. Only through diligent oversight and proactive measures can we hope to mitigate the negative impact of stablecoin-enabled crime and foster a secure and trustworthy environment for digital financial transactions.

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