JAN 17, 2024
Tether bites back on UN report criticism
A United Nations (UN) report published on Monday pointed fingers at USDT for its alleged role in money laundering and scams in Southeast Asia, prompting the stablecoin’s issuer, Tether, to respond.
The stablecoin issuer finds itself under the spotlight once again, facing intense scrutiny over its association with illicit activities, according to the UN report. Responding by way of a blog post, Tether expressed disappointment and pushed back against the accusations.
The firm asserted that the report disproportionately focuses on USDT’s alleged connection to illicit activities, neglecting to acknowledge the positive impact it has had on developing economies in emerging markets.
Collaborating with law enforcement
Tether defended its position by highlighting its collaborative efforts with global law enforcement agencies, such as the Department of Justice (DOJ), the Federal Bureau of Investigation (FBI) and the recently onboarded United States Secret Service (USSS). The company expressed disappointment with the UN’s assessment and stressed that its monitoring measures surpass those of traditional banking systems, historically implicated in money laundering cases.
Having frozen over $300 million in recent months to combat the criminal use of crypto assets, Tether emphasized the traceability of its tokens and its established track record of collaboration with law enforcement. In its blog post, Tether urged the UN to shift the conversation from concentrating solely on risks to discussing how centralized stablecoins like USDT could contribute to the fight against financial crimes.
The UN Office for Drugs and Crime (UNODC) division responsible for Southeast Asia and the Pacific released the report, specifically highlighting USDT as a significant instrument for money laundering in the region, notably on the Tron blockchain. Tether’s response came soon after the release of the UNODC report, where the company emphasized the need for a broader discussion with the UN on addressing financial crimes within blockchain platforms.
Tether acknowledged that there are still numerous opportunities to combat financial crimes on blockchain platforms and encouraged the UN to engage with the industry to comprehend and implement contemporary strategies. The company expressed a willingness to collaborate on initiatives aimed at enhancing the understanding of blockchain technology and its potential in fighting financial crime.
A perennial controversy
Tether has been the subject of a perennial controversy inside and outside the crypto space over the years. Its critics have long accused the company of not having the asset backing to reflect the U.S. dollar stablecoins it issues.
The issue has been compounded by Tether’s inability to produce fully fledged audits as opposed to attestation reports to verify its holdings. Speaking on the edges of the World Economic Forum’s annual meeting in Davos, Switzerland, on Tuesday, Howard Lutnick, CEO of leading global financial services firm Cantor Fitzgerald spoke positively about Tether. He said that his firm has held and managed large quantities of Tether’s assets. Lutnick confirmed that “they have the money they say they have.”
Off the back of Lutnick’s comments, Nic Carter, partner at venture capital and private equity firm Castle Island Ventures, outlined that Tether’s critics have been proven wrong. Carter wrote:
“Tether truthers spent 6 years trying to convince everyone tether would collapse and drag down the industry. it didn’t. . . . Not sure anyone has ever been more wrong about anything.”