UN Agency Calls for Urgent Action against Cryptocurrency Crime in Southeast Asia

Coin World reported:
The United Nations Office on Drugs and Crime (UNODC) expressed deep concern about the role of cryptocurrencies in facilitating illegal activities in Southeast Asia. It pointed out that existing underground banking infrastructure, including poorly regulated casinos, intermediaries, and illegal online gambling platforms, are increasingly using cryptocurrencies as a criminal tool. The rise of high-risk virtual asset service providers (VASPs) has created new avenues for criminal enterprises to operate without accountability, further solidifying these activities, the UNODC warned in its latest report. Therefore, the Office on Drugs and Crime called for urgent action, recommending enhanced monitoring of organized crime in casinos, intermediaries, and online fraud activities, as well as increased training for authorities to identify complex money laundering methods supported by cryptocurrencies. The report stated that while not all scams in the region involve cryptocurrencies, the convenience of fast cross-border transactions still makes cryptocurrencies a preferred payment method for scammers. The UNODC added that this reality, coupled with misinformation and inadequate law enforcement cooperation, further underscores the urgent need to strengthen regulation in the cryptocurrency space. Masood Karimipour, the UNODC representative for Southeast Asia and the Pacific, said in a statement, “Criminal groups are leveraging technological advancements to create larger and more difficult-to-detect fraud, money laundering, underground banking, and online scams. This has led to the formation of a criminal service economy, making the region a key testing ground for transnational criminal networks looking to expand their influence and diversify into new lines of business.” Tether in the Spotlight Again The United Nations agency also reported that Tether (USDT), especially on the TRON blockchain, has become the preferred stablecoin for transnational criminal networks in East Asia and Southeast Asia. These networks are involved in online fraud and money laundering, and Tether facilitates the efficiency of transferring stolen funds. While stablecoins like Tether are becoming increasingly popular among legitimate users, the UNODC stated that on-chain analysis shows that USDT is much more exposed to high-risk entities, including online gambling platforms, online fraud schemes, and high-risk exchanges. The report also emphasized that Tether has conducted transactions worth hundreds of millions of dollars with entities involved in large-scale criminal activities related to drugs and human trafficking, online crime, and the distribution of child sexual abuse material. It is worth noting that some of these transactions involve wallets associated with OFAC-sanctioned entities and the North Korean Lazarus Group, notorious for its hacking activities. Misplaced Criticism of Cryptocurrencies: Report Shows Despite frequent criticism of cryptocurrencies as tools for illegal activities, research shows that cash remains the preferred method for criminals. For example, a recent report from researchers at Homeland Security Investigations (HSI) emphasized that regulated cryptocurrency platforms provide necessary support for law enforcement by using the transparency of blockchain technology to combat crime and enhance national security. This is contrary to misconceptions about their involvement in illegal financing. In fact, data from Merkle Science shows that from July 2021 to June 2024, only 0.61% of USDT transactions and 0.22% of USDC transactions were flagged as potentially illegal, indicating a much lower occurrence of illegal activity compared to traditional finance. Furthermore, Chainalysis has pointed out that in 2023, illegal activities accounted for only 0.34% of total on-chain transaction volume, indicating that concerns about cryptocurrencies may be exaggerated compared to traditional finance.