Uncovering Money Laundering Impact on Stablecoin Prices

Bitrace's Investigation: Money Laundering and Stablecoin Price Impact

Blockchain researcher Bitrace's analysis spotlights money laundering's influence on stablecoin prices, especially Tether (USDT). It delineates two distinct money laundering scenarios impacting the stablecoin market.

1. "Upward" Scenario: Bad actors sell stablecoins to money launderers at market prices and repurchase at inflated rates, paying the difference for laundering services. The report suggests these illegal USDT transactions could price the stablecoin at 8-10 Chinese yuan (RMB).
2. "Downward" Scenario: Stablecoins used for legitimate purposes on platforms with limited Anti-Money Laundering/Know Your Customer (AML/KYC) measures. These platforms accept USDT deposits, facilitating various transactions, reducing the risk of account freezing. USDT is sold at discounts ranging from 0.05 to 0.3 RMB.

Tracking Money Laundering Activities

Bitrace observed criminal groups conducting transactions exclusively in stablecoins to avoid fiat currency exposure. Instances where USDT was frozen by Tether and OKX were tracked. These groups used well-known cryptocurrency platforms like FTX, Binance, and OKX to transfer stablecoins across trading and payment platforms, even to online gambling sites.

Legal Aspects in the U.S. Cryptocurrency Landscape

Bitrace notes the Uniform Commercial Code's Article 12, aiming to protect users' digital asset claims, regardless of prior associations with criminal activities. Additionally, Tether collaborates with the FBI to address illicit activities on its platform, aligning with law enforcement to tackle illegal practices.