3 min read
A money laundering organization connected to United States cocaine imports from Mexico and Colombia uses Tether (USDT), alleges a new report.
Drug traffickers have turned to crypto, and USDT in particular, “as a way to quickly move wealth across borders in recent years,” according to a recent Court Watch report. Court records from multiple cases allege that criminal organizations—including the Sinaloa Mexican drug cartel—use such assets for large-scale drug trafficking.
The news follows a recent report that a Canadian Olympic snowboarder and his gang allegedly used USDT as part of a cocaine trafficking operation, with the group also being purportedly responsible for multiple murders. Law enforcement say cocaine was moved from Colombia through Mexico and then into the United States and Canada.
The reports say the situation is so dire that USDT is sold at a discount in Mexico because the knowledge that it comes from drug proceeds is so widespread.
The report cites one source saying, “The current trend was to purchase USDT from Mexico-based groups at a cheaper rate than the market price, and then sell the USDT in Colombia at Casa de Cambios [currency exchanges], virtual currency exchanges, over-the-counter (OTC) transactions, or peer-to-peer transactions (P2P).”
“The USDT was sold at a cheaper rate in Mexico because it was known to be drug proceeds,” the anonymous source highlights. Decrypt could not independently verify that USDT is sold at a discount in Mexico.
One recent document—a complaint for civil forfeiture—saw the United States government looking to access over 5 million seized USDT split across three separate Binance accounts. Those funds were also allegedly linked to cocaine trafficking, and one of the Binance exchange accounts involved has processed over $15 million worth of funds.
Tether highlighted that those transactions took place on the secondary market without any involvement by the stablecoin issuer.
“Unlike fiat currency, which remains the dominant form of funding for criminal and terrorist efforts globally, Tether has the ability to track all transactions and halt USDT whenever it is used in any illicit manner,” a Tether representative said.
"Despite our best efforts, like most companies, we can't always preemptively stop every bad actor," a Binance spokesperson told Decrypt. The spokesperson also emphasized that the exchange's strict anti-money laundering measures were in place with "sophisticated internal and third-party tools to spot potential illicit activity."
Another document sheds light on a Federal Bureau of Investigations (FBI) investigation into a separate money laundering operation that leveraged cryptocurrency brokers. The operation was connected to major Mexican cartels—including the Sinaloa cartel—and laundered over $52 million in drug proceeds before 2021 and 2023.
This case also involved USDT, with a source telling investigators that a Costa Rican attorney “was seeking to purchase large amounts of USDT.” This does not appear to be a new trend, with a 2020 report indicating that drug cartels were already known to use USDT as part of their money-smuggling operations at the time.
USDT is not the only crypto asset used by cocaine smugglers. Past reports also indicate that millions of dollars worth of USDT was used alongside Bitcoin (BTC) by Mexico-based customers of Chinese fentanyl producers.
Edited by Stacy Elliott.
Editor's note: Adds responses from a Tether spokesperson.
Decrypt-a-cookie
This website or its third-party tools use cookies. Cookie policy By clicking the accept button, you agree to the use of cookies.