Drug Cartels Exploit Tether and Bitcoin for Money Laundering, Court Documents Reveal

Drug cartels are using Tether and Bitcoin to launder millions, according to recently unsealed court documents. This situation raises serious concerns, especially given Tether’s connections to Wall Street. For example, Cantor Fitzgerald has plans worth billions, which adds to the scrutiny around these allegations.

Reports indicate that drug cartels from Mexico and Colombia are leveraging cryptocurrencies, particularly Tether (USDT) and Bitcoin (BTC), to move tens of millions of dollars. Criminal organizations, like the Sinaloa cartel, have turned to stablecoins and blockchain technology to shift wealth across borders. This information comes from a report by 404 Media.

Benzinga reached out to Tether's CEO, Paolo Ardoino, for comments. A confidential source revealed that cartels buy USDT in Mexico at prices lower than the market rate. “The trend is to purchase USDT from Mexico-based groups at a cheaper price and then sell it in Colombia,” the source said.

These transactions often happen through currency exchanges, peer-to-peer networks, and over-the-counter (OTC) trades. The court filings show significant cryptocurrency activity linked to these cartels. One Binance account under investigation processed over $15 million from May 2020 to September 2023, with 452 deposits and 567 withdrawals.

Often, the transactions involve transferring funds across different blockchain networks and converting them into other cryptocurrencies, like Ethereum, to hide the money's origins. The documents also connect Grupo Gueratti, an investment management firm based in Guadalajara, Mexico, to money laundering activities. Investigators used undercover operatives to collect cash in the U.S., convert it into cryptocurrency, and transfer it to wallets associated with L.E.O.T.

By April 2024, undercover operations had facilitated more than 20 money-laundering transactions involving USDT. Binance told 404 Media that it works closely with law enforcement to combat criminal activities. “We work tirelessly alongside law enforcement to help combat crime. When we receive requests for information or to freeze funds, we act quickly,” the company stated. Binance emphasized that blockchain technology provides transparency that aids anti-money laundering efforts.

Tether echoed these sentiments, highlighting its collaboration with law enforcement to track illicit activities. “Every transaction is traceable, every asset can be seized, and every criminal can be caught,” a Tether spokesperson said. The company claims to have blocked over $2 billion in USDT linked to criminal activities and has assisted law enforcement in 195 cases across 48 countries.

The documents reveal that drug cartels are also using Bitcoin alongside Tether for transactions. The FBI is investigating another money-laundering organization tied to the Sinaloa cartel, which laundered over $52 million in drug proceeds between 2021 and 2023. Additionally, Chinese manufacturers of synthetic opioids have reportedly used Bitcoin for payments, allowing drug traffickers to transfer large sums instantly around the globe.

This investigation comes as Tether's connections to Wall Street deepen. Cantor Fitzgerald, led by Howard Lutnick, has been a key custodian of Tether's reserves. Lutnick is reportedly planning a multi-billion-dollar program involving Tether, offering dollar loans to clients who pledge Bitcoin as collateral. While Lutnick has praised Tether's financial transparency, the company has faced allegations of aiding illegal activities, including money laundering—a claim that CEO Paolo Ardoino has denied.