Tether (CRYPTO: USDT) plays a critical role in facilitating a "parallel banking system" utilized by organized crime groups.

What Happened: According to the United Nations (UN), USDT has become a favored payment method for criminal activities, particularly in the illegal gambling sector in Southeast Asia.

The UN report points out that online gambling platforms, especially those operating illicitly, are increasingly becoming hotspots for cryptocurrency-based money laundering.

It specifically mentions the use of Tether on the Tron (CRYPTO: TRX) blockchain as a common tool in these activities. This trend is contributing to the growth of the illicit digital economy in Southeast Asia.

Furthermore, USDT is identified as a preferred currency in 'pig butchering' or romance scams.

In these scams, criminals build trust with victims, often suggesting a potential romantic relationship, before persuading them to transfer substantial sums of money.

Organized crime "has effectively created a parallel banking system using new technologies, and the proliferation of loosely or entirely unregulated online casinos together with crypto has supercharged the region’s criminal ecosystem," Jeremy Douglas, a regional representative of the UN, told The Financial Times.

Benzinga has reached out to Tether CEO Paolo Ardonio for a comment.

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Why It Matters: A previous report in August last year detailed the trafficking of hundreds of thousands of individuals by organized crime syndicates for executing crypto scams and online fraud.

These scams predominantly use crypto, particularly USDT, due to its perceived untraceability.

Traffickers reportedly use USDT to sell slaves, while scammers encourage victims to use the stablecoin for deposits.

The UN's report concludes with a call to action for Southeast Asian governments to implement a human rights response.

It also urges banks and crypto exchanges to adopt a comprehensive approach, aligning with international human rights standards, to prevent traffickers from converting their illicitly obtained crypto into fiat currency.

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Image: Edited in Canva