UN Report Highlights Crypto's Role in Illicit Economies Across East and Southeast Asia
Summary:
The United Nations Office on Drugs and Crime has revealed in a report that cryptocurrency is being misused in growing illegal economies across East and Southeast Asia. Criminals are combining cutting-edge tech with crypto, creating complex challenges for law enforcement. Underregulated casinos and 'pig-butchering' romance scams have surged in the Mekong Region, with advanced bots and deepfake technology providing more complex and damaging fraud schemes. Illicit operations are often situated in under-regulated zones under the control of autonomous armed groups, leading to the rise of an underworld financial system centered around these casinos. The report also suggests that local cryptocurrency exchanges might be playing a role in money laundering. It further highlights the use of Tether stablecoin on the Tron blockchain due to its stability and ease of use. The report ends with several policy recommendations to fight financial lawlessness in the region.
A recent publication by the United Nations Office on Drugs and Crime highlights concerns about the use of cryptocurrency in illicit markets expanding across East and Southeast Asia. The account raises fears that cutting-edge technological advancements are being amalgamated with illicit money, causing intricate challenges for law enforcement. Underregulated or unlawful casinos and 'pig-butchering' con-romance scams have surged dramatically in the Mekong Region poses the report. These burgeoning economic patterns showcase extreme sophistication, with large language model-based bots, deepfake tech, and automation facilitating more complex and harmful fraud schemes, compromising individuals and the conventional banking sector.
Criminals also exploit loophole areas such as underregulated special economic zones and territories controlled by individual armed units to station their illicit gambling and scam networks. There has been a rise in a specific breed of travel industry that revolves around such casinos, with junket operators providing more than just travel and lodging facilities. The report reveals that these junket facilitators act as international banks, offering unregulated financial services such as credit issuance, remittance, currency swapping and payment solutions in multiple currencies, and unlawful debt collection methods, which have been usurped by organized crime groups.
According to the paper, Tether (USDT) stablecoin on the Tron blockchain is vastly favored by illicit financial individuals in the region due to its stability, ease of operations, anonymity, and affordable charges. Another worrisome issue is the role of local cryptocurrency exchanges as facilitators in money laundering, triggered by significant gaps in crime attribution on the blockchain, false reporting by crypto exchanges, and the widespread presence of wash trading, which magnifies crypto transaction volumes, thereby reducing noticeable illicit transactions. The extensive list of suggested policy upgrades and awareness-boosting initiatives in the report calls for stringent measures to combat the region's rampant financial deviances.
The activities of Circle's USD Coin (USDC), employed on Tron, raised questions by an independent nonprofit organization, as a Reuters examination connected Tron with unlawful funding in the Middle East. In December, China initiated stern actions against the use of USDT in foreign exchange. Meanwhile, Tether, the largest stablecoin with a nearly $95 billion market cap, has been consistently cooperative with U.S. law enforcement. Stablecoins are proving to be beneficial in an array of scenarios related to foreign exchange and decentralized finance operations, with their usage skyrocketing as more governments regulate them.
Published At
1/16/2024 12:41:33 AM
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