Crypto giant Tether's ties to terrorists, trafficking to be exposed in crackdown on 'Ponzi scheme' founded by former Disney child star

The well-known stablecoin Tether has come under scrutiny for its alleged links to terrorist activity and human trafficking. Conservative nonprofit Consumers' Research claims Tether facilitates traceless payments for illegal purposes and has launched a multimillion-dollar ad campaign to expose these alleged links.

The consumer advocacy firm is launching a multimillion-dollar ad campaign highlighting Tether's alleged links to the Chinese and Russian governments, terrorist organizations, human trafficking rings, and Hamas.

The campaign criticized Tether for its lack of transparency and refusal to undergo a thorough audit to verify its one-to-one dollar backing. Will Hild, executive director of consumer research, called Tether a "Ponzi scheme" and compared it to the failed cryptocurrency exchange FTX. He claimed that Tether was widely used for criminal activities, including evading sanctions and financing terrorism.

Tether's origins and controversy

Tether was co-founded in 2014 by former Disney actor Brock Pierce, who was a child actor in the movie "Mighty Ducks" before reinventing himself as a cryptocurrency cult leader. In 2014, he invented the highly controversial Tether coin, which experts feared could lead to the collapse of the digital currency system, and he said he had no relationship with the company since 2015.

Despite Tether’s claims of strong reserves, Hild noted that the stablecoin does not meet audit standards, raising similar red flags as FTX.

Consumer research has highlighted Russia’s alleged use of Tether to evade sanctions and engage in illegal activities such as human trafficking and drug smuggling. In November 2023, Tether reported freezing nearly $225 million linked to a human smuggling ring. The stablecoin has also been implicated in terrorism financing, with ties to groups such as Hamas, ISIS, and al-Qaeda.

Response from a Tether Spokesperson

A Tether spokesperson insisted that it has full support and is committed to preventing illegal uses of its technology. A spokesperson said Tether has worked with the FBI and the U.S. Secret Service to combat criminal activity, freezing more than $1.3 billion in USDT linked to illegal activity.

Still, there are clear terrorist uses for cryptocurrencies more broadly — more than 100 accounts on platforms like Binance were found to be funneling funds to Hamas as it waged war on Israel.

In October 2023, approximately $800,000 was frozen to prevent funds from flowing to terrorism.

Hild reveals the dark side of Tether: hidden links with terrorism, human trafficking and drug trafficking

According to the Wall Street Journal, North Korea even uses cryptocurrencies to finance its nuclear program to circumvent sanctions through traditional trade means.

"Tether is notorious for its links to criminal activity," Heard told the Daily Mail. "Last year, Tether was involved in nearly $20 billion in illegal transactions. Tether has also been used by groups such as Hamas, al-Qaeda and ISIS, and financial transactions related to terrorism have reached millions of dollars."

Cryptocurrencies have also been used to help Russia bypass sanctions imposed for its invasion of Ukraine. Heard said Tether was involved in human and drug smuggling operations.

In November 2023, after an investigation by the Secret Service, Tether announced that it had frozen nearly $225 million in funds associated with human smuggling rings. Tether said the tokens "are linked to an international human trafficking group in Southeast Asia that is responsible for the global 'pig killing plate' love scam."

According to the Wall Street Journal, Tether is also the preferred payment method for Chinese people who manufacture fentanyl in Mexico. This cryptocurrency has some characteristics that make it more difficult for authorities to track its payments. "We are exposing Tether's questionable business practices, including a decade-long refusal to conduct audits and the frequent use of the product by terrorists, drug dealers, and human traffickers," Heard said.

"Given these warning signs, we are concerned that Tether could very well become the next FTX." He warned consumers to be wary of any so-called stablecoin that cannot properly prove its holdings.

The consumer research firm will air anti-Tether television ads in Washington, D.C. and New York, as well as display related ads in New York's Times Square.