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More than $64 billion in stablecoins has been laundered through Tron over a period of 18 months.
From September 2021 to March 2023, Tron network addresses identified as potential AML offenders received over $64.25 billion in total. These transactions were made in stablecoins, which analysts suggest contributed to the depegging of certain coins.
An examination of addresses on the Tron network, carried out by Bitrace and released by Wu Blockchain, revealed that over $64.25 billion in stablecoins was laundered over a period of 18 months. Analysts also indicated that illicit activities involving stablecoins are a contributing factor to their depegging from the underlying asset.
Research from Bitrace indicated that money laundering can significantly influence stablecoin valuations, particularly illustrated through Tether (USDT) transactions. Analysts identified two scenarios in which stablecoins are utilized for money laundering:
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- The “Upward U” scenario entails selling stablecoins at the market rate and subsequently repurchasing them at an inflated price. These transactions are executed through low-risk addresses, enabling fraudsters to circumvent AML regulations. The price difference in these transactions serves as a fee for laundering services.
- The “Downward U” scenario involves utilizing stablecoins for entirely legitimate transactions, but through platforms that offer minimal safeguards against AML policies and KYC breaches. Due to insufficient oversight on these platforms, stablecoin sellers can evade “reverse freezing” of their accounts.
Analysts from Bitrace pointed out that both scenarios are mainly employed to avoid direct dealings with fiat currency and to circumvent sanctions imposed by centralized trading platforms and law enforcement agencies.
The most recent PwC report indicated that the number of countries implementing a legal framework for stablecoins rose by 25% over the past year.
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