Bitrace Report Examines Money Laundering with Stablecoins
A recent report by blockchain researcher Bitrace has shed light on the potential use of stablecoins in money laundering activities.
The report, published on December 26 and translated by Wu Blockchain , highlighted two distinct scenarios in which stablecoins, specifically Tether (USDT), were employed for illicit purposes.
In the first scenario, known as the “upward” case, bad actors sell stablecoins to money launderers at market prices.
The launderers then repurchase another stablecoin at an inflated price, with the price difference serving as payment for the laundering services.
According to the report, illegal USDT transactions may be priced at 8-10 Chinese yuan (RMB), resulting in a profit for the money launderers.
The second scenario, referred to as the “downward” case, involves the use of stablecoins for legitimate purposes on platforms lacking comprehensive Anti-Money Laundering/Know Your Customer (AML/KYC) measures.
Proxy payment platforms, which accept USDT deposits and use fiat funds to facilitate payments on various platforms, are utilized for activities such as online gambling, fund settlements, live broadcasting gifts, e-commerce orders, and employee salaries.
Due to weak AML/KYC verification on these platforms, stablecoin sellers in these transactions face lower risks of “reverse freezing,” which involves freezing accounts that have received crypto tied to criminal cases.
As a result, USDT may be sold at a discount of 0.05 to 0.3 RMB in such cases.
Bitrace’s report also highlighted the tracking of frozen USDT by Tether and the OKX platform.
The criminal group identified in the report utilized well-known cryptocurrency trading platforms like FTX and Binance, as well as OKX, to transfer
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