In summary
- Drug traffickers used USDT to transfer money between Mexico, Colombia and the US.
- The FBI investigated $52M laundering operations linked to Mexican cartels between 2021 and 2023.
- USDT is sold at a discount in Mexico due to its association with illicit activities.
A money laundering organization linked to US cocaine imports from Mexico and Colombia uses Tether (USDT), according to a new report.
Drug traffickers have turned to cryptocurrencies, and specifically USDT, “as a way to quickly move wealth across borders in recent years,” according to a recent Court Watch report. Court records from multiple cases allege that criminal organizations, including the Mexican Sinaloa cartel, use these assets for large-scale drug trafficking operations.
The news follows a recent report that a Canadian Olympic snowboarder and his gang allegedly used USDT as part of a cocaine trafficking operation, and were also allegedly responsible for multiple murders. Authorities indicate that the cocaine was transported from Colombia through Mexico and then to the United States and Canada.
Reports indicate that the situation is so serious that USDT is being sold at a discount in Mexico due to widespread awareness of its provenance from drug-related activities.
The report quotes a source as saying: “The current trend was to buy USDT from groups based in Mexico at a cheaper rate than the market price, and then sell the USDT in Colombia on Casas de Cambio, Cryptocurrency exchanges, transactions over-the-counter (OTC) or peer-to-peer (P2P) transactions.”
“USDT was sold at a lower price in Mexico because it was known to come from drug-related activities,” highlights the anonymous source. Decrypt could not independently verify that USDT is sold at a discount in Mexico.
A recent document – a civil forfeiture complaint – shows that the US government is seeking access to more than 5 million seized USDT, spread across three separate Binance accounts. These funds are also allegedly linked to cocaine trafficking, and one of the exchange accounts involved has processed more than $15 million in funds.
Tether highlighted that these transactions occurred in the secondary market without any participation from the stablecoin issuer.
“Unlike fiat currency, which remains the dominant form of financing criminal and terrorist efforts globally, Tether has the ability to track all transactions and stop USDT when used illicitly,” stated a Tether representative. .
“Despite our best efforts, like most companies, we are unable to completely prevent every malicious actor,” a Binance spokesperson said. The spokesperson also emphasized that the exchange has strict anti-money laundering measures and “sophisticated internal and third-party tools to detect potentially illicit activities.”
Another document sheds light on an FBI investigation into a money laundering operation that took advantage of cryptocurrency brokers. The operation was connected to major Mexican cartels — including the Sinaloa cartel — and laundered more than $52 million in drug profits between 2021 and 2023.
This case also involved USDT, with a source informing investigators that a Costa Rican lawyer “was looking to purchase large amounts of USDT.” This does not appear to be a new trend, as a 2020 report indicated that drug cartels were already known to use USDT as part of their money smuggling operations at the time.
USDT is not the only crypto asset used by cocaine traffickers. Previous reports also indicate that millions of dollars in USDT were used alongside Bitcoin (BTC) by Mexican clients of Chinese fentanyl producers.
Edited by Stacy Elliott.
Editor’s note: We added responses from a Tether spokesperson.
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