The Crypto for Money Laundering

How Tether Became the Money Launderers’ Dream Currency

In the world of cryptocurrencies, one name stands out for both its controversial influence and its immense popularity: Tether. Initially designed to make the digital currency world more stable, Tether has become something else entirely. It’s now fueling a global shadow economy, and, surprisingly, it’s gained a certain level of respectability in the process. But how did this happen? Let’s break it down.

A Routine Bust Turns Into a Global Investigation

It all started with what seemed like a routine police bust in 2021. Police in the UK stopped a driver named Fawad Saiedi on the M1 motorway, suspecting he was transporting illicit cash. They found £250,000 in cash stuffed into his car. While that may sound like a decent haul, drug gangs in Britain make ten billion pounds a year, so this wasn’t even a drop in the ocean.

However, the real discovery came when Saiedi’s phone was searched. Among his messages was communication with a Russian businesswoman named Ekaterina Zhdanova. Who was she? A glamorous Siberian socialite who had connections to cybercriminals and, it turned out, a key player in an intricate money-laundering operation.

Connecting the Dots: How Tether Links Criminal Networks

Zhdanova’s operation was a well-oiled machine that bridged various underground economies. She didn’t just launder drug money; she also assisted ransomware hackers, oligarchs, and even sanctioned Russian intelligence operatives in moving their funds across borders. How did she do this? Through a little-known but highly effective cryptocurrency: Tether.

Tether is what’s known as a “stablecoin.” Unlike Bitcoin, which can fluctuate wildly in value, Tether is pegged to the US dollar. One Tether token (USDT) is always worth $1. This makes Tether a perfect tool for criminals who want to move money without attracting attention.

For Zhdanova’s operation, it was as simple as collecting cash from criminals in Western Europe and exchanging it for Tether tokens. Once she had the USDT, she could transfer it anywhere—no borders, no customs, no questions asked. This made it incredibly difficult for authorities to trace or stop the flow of illicit funds.

Tether’s Unintended Role in the Shadow Economy

Tether’s popularity among criminals isn’t just a coincidence—it’s by design. The stablecoin's value is locked to the US dollar, which makes it a highly attractive alternative to traditional financial systems. Criminals can use it to bypass banks, move money internationally, and—most importantly—keep their activities off the radar of law enforcement.

For example, Zhdanova helped Russian oligarchs bypass sanctions by using Tether to transfer millions of dollars across the globe. Since Tether operates with minimal oversight, there were few checks to stop these transactions. What’s more, moving money via Tether is cheap—far cheaper than using traditional financial systems.

When asked about money-laundering concerns, Tether claimed they were "fully committed to combating illicit activity," stating they froze $2.5 billion in illicit assets in one year. But critics argue that despite these efforts, Tether is still the primary currency of choice for those looking to clean dirty money.

Tether’s Rise to Mainstream Respectability

In recent years, Tether has evolved from a fringe cryptocurrency to a mainstream financial tool. In 2024, Tether generated $13 billion in profits—almost double that of BlackRock, the world’s largest asset manager. The company now boasts around half a billion users, and its influence is spreading quickly, even to traditional financial markets.

In fact, the US government seems to have embraced the role of stablecoins like Tether in the economy. When Donald Trump was re-elected in 2024, he and his administration made a significant shift towards supporting cryptocurrencies, including Tether. While some in the financial world were still concerned about its role in crime, Trump’s administration saw the benefits of using Tether to strengthen the US dollar’s position on the global stage.

The Case for Tether: Financial Inclusion or Financial Mayhem?

Tether’s CEO, Paolo Ardoino, often defends the company, claiming it provides banking services to people in underserved or poorly governed countries. In these regions, people may not have access to reliable financial institutions, and Tether offers a cheaper alternative for remittances and savings.

It’s hard to argue with that point: Sending money through Tether is far cheaper than traditional money-transfer services, and it’s much more accessible to people who don’t have access to banking. But there’s a darker side to this, too. As Tether spreads further into global finance, it continues to be a key enabler of criminal operations.

Zhdanova’s money-laundering operation wasn’t an isolated incident. Tether has been linked to “pig butchering” romance scams in Southeast Asia, North Korean hackers, and even terrorist financing. Law enforcement agencies, while aware of Tether’s role in these schemes, are often powerless to stop it.

The Dark Underbelly: How Tether Operates with Minimal Oversight

Unlike traditional financial institutions, which are held to strict regulatory standards, Tether operates in a largely unregulated space. While the company has tried to bolster its public image by claiming to cooperate with law enforcement agencies, it’s widely believed that the sheer scale of its transactions makes it virtually impossible to monitor effectively. Tether brings in millions of new customers each quarter, and with only a handful of investigators checking these accounts, much of the illicit activity slips through the cracks.

Tether’s claim that they help authorities track criminal transactions is somewhat misleading. Yes, the blockchain is transparent, but the speed at which funds move makes it incredibly difficult for investigators to catch up before the money has already disappeared.

Tether’s logo

The Future of Tether and Stablecoins

Tether’s influence isn’t likely to fade anytime soon. The company is deeply embedded in the global financial system and has a wide-reaching impact. As the US government and other nations continue to loosen regulations around cryptocurrencies, Tether’s role as a “financial intermediary” will only become more entrenched.

But with its increasing legitimacy comes greater risk. The more Tether spreads, the more useful it becomes to criminals. Its ease of use, low transaction costs, and global reach make it a tool for the global shadow economy.

Conclusion: A Double-Edged Sword

Tether’s rise is a paradox. It’s a cryptocurrency designed to bring stability and financial inclusion, yet it’s become one of the most effective tools for money laundering and illicit financial activity. While the company claims to work with law enforcement to prevent criminal use, its lack of meaningful oversight leaves many concerned about its future impact.

As Tether continues to thrive, it raises an important question: Should we be celebrating its success as a financial innovation, or should we be worried about the consequences of allowing such a powerful tool to operate without sufficient regulation?

In the end, Tether is a product of a new, decentralized financial landscape—one that holds both incredible promise and significant risk. And as the world continues to embrace cryptocurrencies, the question remains: will the benefits outweigh the dangers, or will Tether and similar stablecoins only fuel the growing global shadow economy?