Cryptocurrency Under Scrutiny: Tether's Role in Russian Sanctions Evasion

British investigators have revealed that Tether, a cryptocurrency backed by a major political donor, has been used to assist Russia's military efforts, particularly in evading sanctions related to its war against Ukraine.

The National Crime Agency (NCA) has spent four years investigating a multibillion-dollar scheme that allegedly exchanges cash from illegal activities in the UK for Tether tokens, which are known for their anonymity and stability.

According to the NCA, $24 million worth of cryptocurrency has been seized in connection with this investigation, with a significant portion traced back to Tether. The NCA's Operation Destabilise has identified that Russian organized crime groups have turned to Tether in their laundering activities since around 2020.

Tether, headquartered in El Salvador, reported profits of $13 billion for 2024, significantly higher than many large corporations, and has around 184 billion USDT in circulation. Christopher Harborne, a key investor in Tether and a prominent donor to UK political figures, including Nigel Farage, is under scrutiny, although he denies any direct involvement in the alleged criminal activities facilitated by Tether.

Critics argue that the demand for Tether among illicit networks directly contributes to the company's profitability, raising concerns about the stablecoin's role in global money laundering and crime. The NCA has indicated that the laundering operations have supported Russian military supply chains, with evidence suggesting that components for weapons systems have been acquired despite international sanctions.

Recent statements from Ukrainian officials highlighted that Russian aerial attacks have utilized foreign-made parts, including those from the UK. As investigations into Tether's connections to these activities continue, the company has claimed a commitment to combating illegal use of its tokens, asserting that it has cooperated with law enforcement agencies worldwide to freeze or block significant amounts of USDT linked to illicit activities.

Moreover, the International Consortium of Investigative Journalists has reported that centralized exchanges like Binance and OKX are often used as intermediaries for these transactions, further complicating the tracing of illicit funds.

These exchanges have faced scrutiny for their compliance with anti-money laundering regulations, with both Binance and OKX having previously pleaded guilty to operating without adequate safeguards. The ongoing investigations underscore the challenges in regulating cryptocurrencies and highlight the potential for their misuse in facilitating crime and evading sanctions on a global scale.