How USDT became the favorite coin for money launderers ( and why this is a problem for the entire crypto )

Ser_APY_2000

2025-11-05 14:14:34

The crypto world promised financial freedom, but it turns out it’s also freedom for criminals. USDT — the most popular stablecoin on the planet — has become a classic tool for money laundering. Let’s break down how.

Three Steps from Zero to Millions

Introduction: Illegal funds are converted into USDT via P2P exchanges or unregulated OTC platforms.

Distribution: The money is split into hundreds of small transactions or transferred internationally through blockchain — traditional banks can’t track it.

Integration: The cleaned funds are returned to the legitimate economy — buying real estate, businesses, or investments.

Why USDT is Perfect for This

1. Unlimited Liquidity. Tens of billions of dollars in USDT are traded daily. Your suspicious transaction is just a drop in the ocean.

2. Blockchain-Level Anonymity. USDT addresses aren’t linked to your passport unless you go through a KYC exchange. Mixers and cyclical trading make tracing even harder.

3. Regulatory Loopholes. Many P2P platforms pretend not to see what’s happening. Others deliberately bypass AML policies.

4. International Transfers in Seconds. You’re having lunch in Moscow, and the money’s already in Bangkok. Traditional banking systems can’t do that.

How They Do It

OTC Mixing: Large sums are exchanged for cash through private dealers — no blockchain record.
Altcoin Carousel: Funds are transferred into less traceable coins, like NFTs or obscure altcoins, then back again.
Fake Trading: One wallet sends money to another, which then returns it — transaction histories look legitimate.

Real Cases

Lanzhou, 2024: A woman was scammed in a “romance fraud” — they stole 2 million yuan, converted it into USDT on a fake platform. Police found 15 suspects and assets worth 35 million yuan.

Global Trend: Law enforcement agencies worldwide report that USDT-based money laundering is growing exponentially.

What’s Next?

Regulators are already taking action. KYC controls on exchanges are tightening, blockchain analytics are advancing, and international law enforcement cooperation is increasing.

But the fact remains: As long as USDT remains the easiest way to transfer money across borders without a bank, money launderers will have a tool. The crypto industry needs transparency — otherwise, regulators will just ban everything.

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