Research Summary
The report discusses the increasing use of USDT (Tether) in illicit activities and the impact of anti-money laundering measures on the cryptocurrency community. It also provides insights from Bitrace, a blockchain data analysis company, on how to avoid receiving illicit funds and the reasons behind the illicit market’s preference for USDT over other cryptocurrencies.
Key Takeaways
Increasing Exploitation of Cryptocurrencies in Cybercrime
- Exploitation of Cryptocurrencies: The report notes an increase in the use of cryptocurrencies, particularly USDT, in cybercrime due to its high liquidity, convenient transfers, and low fees. These features, while beneficial to ordinary users, are exploited by criminals for rapid money laundering and transfer.
USDT’s Popularity in the Illicit Market
- USDT’s Liquidity and Ecosystem: USDT’s abundant liquidity and rich ecosystem, supported by both centralized and decentralized exchanges, make it the preferred choice for the illicit market. Its lower fees compared to other public chains like Ethereum or Bitcoin also contribute to its popularity.
Impact of Anti-Money Laundering Measures on USDT
- Crackdown on Illicit USDT: Tether and its cooperating law enforcement agencies have intensified their crackdown on illegal funds. This has led to a shift in industry perceptions, with criminals now aware that law enforcement agencies can track on-chain funds, freeze exchange accounts, and even blacklist them due to suspected illegal fund flows.
USDT vs USDC
- Preference for USDT over USDC: The report suggests that the choice of USDT over USDC is largely due to path dependence. Despite USDC potentially offering similar or better services, users, including those engaged in illegal activities, prefer to use USDT due to its earlier market launch and extensive ecosystem support.
Reducing the Risk of Receiving Illicit U
- Preventing Receipt of Illicit Funds: The report provides several recommendations to reduce the risk of receiving illicit funds, including avoiding transactions in highly anonymous environments, staying away from online gambling, avoiding money laundering activities, and using monitoring tools to check the counterparty’s address risk.
Actionable Insights
- Enhanced Vigilance: Given the increasing use of cryptocurrencies in illicit activities, users and institutions should exercise enhanced vigilance when dealing with cryptocurrencies, particularly USDT. This includes avoiding transactions in highly anonymous environments and using monitoring tools to check the counterparty’s address risk.
- Understanding of Cryptocurrency Regulations: With the lack of a unified standard for anti-money laundering regulations for cryptocurrencies, it is crucial for users and institutions to understand the regulations in their specific countries or regions to avoid legal liabilities.
- Consideration of Alternative Cryptocurrencies: While USDT is currently the preferred choice for many users, the report suggests that other cryptocurrencies like USDC may offer similar or better services. Users should consider these alternatives, particularly in light of the increasing anti-money laundering measures targeting USDT.
