Tether Allegedly Facilitating Money Laundering Linked to Mexican Drug Cartels

Tether, the world’s third-largest cryptocurrency by market capitalization, is under scrutiny from U.S. federal authorities for allegedly aiding money laundering activities, including operations tied to Mexican drug cartels.

A report by 404 Media highlights court cases in which federal authorities accuse Tether of being used in cross-border money laundering schemes associated with major cocaine seizures and cartel activities in Mexico and Colombia.

Tether, a stablecoin designed to maintain a value pegged to the U.S. dollar, plays a significant role in cryptocurrency trading, reportedly accounting for over 50% of Bitcoin’s daily trading volume and as much as 70% for other leading cryptocurrencies. Despite its prominence, Tether has faced ongoing criticism for its alleged role in enabling financial crimes.

Court filings reviewed by 404 Media reveal that a criminal network allegedly funneled tens of millions of dollars using Tether to rapidly transfer funds across international borders.

One civil forfeiture complaint detailed in the documents seeks to seize more than $5 million worth of Tether held in three cryptocurrency accounts suspected of being connected to drug trafficking operations. However, the total financial activity in these accounts far exceeds the seizure amount. According to the filing, a single account managed $15.6 million in deposits across 452 transactions and nearly $15.7 million in withdrawals through 567 transactions.

The court document stated: “Given this suspicious transaction activity, the high cryptocurrency amounts managed with unknown sources of wealth [and] the similar pattern observed in other Mexican users investigated, there was a high probability that the user’s activities were related to money laundering.”

A federal source quoted in the filings, who remained anonymous, alleged that Tether is sold at a discount in Mexico due to its connections to drug trafficking. The source claimed that criminal networks profit by purchasing cryptocurrency in one market and selling it in another.

In response to the allegations, Tether issued a statement defending its efforts to combat illicit activity: “Tether works tirelessly with top US law enforcement agencies to stop illicit actors accessing and using USDT.”

The company emphasized its cooperation with law enforcement, stating, “We’ve acted on more than 30 transnational organized crime investigations, including those cartel cases, in coordination with US agencies and authorities in seven other countries.”

Tether also reiterated its commitment to financial integrity, adding: “Tether will continue to take action against illegal and harmful uses of USDT, arm in arm with authorities around the globe, as it is committed to a safe, transparent and fair financial system.”

These revelations come as Howard Lutnick, CEO of Cantor Fitzgerald—Tether’s custodian—is being considered for the position of U.S. Commerce Secretary. Lutnick has publicly advocated for stablecoins, emphasizing their potential to bolster the U.S. economy.

Despite the controversies, Tether remains integral to global cryptocurrency markets, with a market capitalization of $132 billion.

By fLEXI tEAM