The LED billboard overlooking Times Square on 43rd Street in New York City carried a cryptic slogan: “Tethered to Corruption.” Consumers’ Research, a U.S. advocacy group, sponsored the sign as part of a 2024 campaign warning about the risks of Tether, a digital currency popular with drug cartels and scam syndicates.

Pegged to the U.S. dollar, Tether is currently the third-largest cryptocurrency platform after Bitcoin and Ethereum. The “shadow dollar” is regulated in the United States, but unpoliced transactions in secondary markets have embroiled the digital coin in a series of criminal investigations by the U.S. Department of Justice (DOJ). A 2024 report by the United Nations Office on Drugs and Crime concluded that Tether was the “preferred choice for crypto money launderers” in Southeast Asia.

The arrest of a dual national at Atlanta airport in April 2024 cracked open a $73 million money-laundering operation involving Tether and a cryptocurrency company in Cambodia. The accused, a citizen of China and Saint Kitts and Nevis, oversaw the transfer of funds collected through romance investment scams known as “pig butchering.” According to a New York Times report, Daren Li was part of a network of “money mules” who used offshore bank accounts to move fraudulently obtained Tether into cryptocurrency wallets on established exchanges like Binance. The unregulated link in the money trail was Huione International Pay, a Phnom Penh-based crypto facilitator.

The U.S. Treasury Department called the parent company Huione Group “a significant node of the money laundering ecosystem” and severed the conglomerate’s connections to the American banking system last May. An analysis by ICIJ (International Consortium of Investigative Journalists) estimated that Huione continued to funnel nearly $635 million in cryptocurrency through exchanges like Binance and OKX even after the company became a “pariah” within the global financial system in 2024.

One scam victim whose savings ended up at Huione was a North Carolina man identified in a 2023 Federal Bureau of Investigation (FBI) case as K.W. The 67-year-old struck up an online relationship with “Jeanie” and over a two-month period transferred $1.8 million in cryptocurrency, draining his retirement account. The FBI traced some tokens to blockchain addresses linked to Huione and worked with Tether to freeze the funds.

“I’ve never heard of pig butchering that isn’t Tether,” asserted a former prosecutor with Santa Clara County in California who specialized in transnational cybercrime. In an interview, Erin West told Wired magazine that “scammers can’t risk the volatility of any of the other coins like bitcoin or ether. All they want is to move assets from the victims’ hands to their own in the cheapest, easiest way possible.”

CoinGeek, a blockchain news website, called Tether “the financial grease that oils this criminal machine,” referring to the laundering of funds obtained from victims of online romance-investment scams. “The tokens can be pinged near-instantaneously along chains of digital wallets to obfuscate the source,” explained a Wall Street Journal investigative report.

Tether has repeatedly defended the “transparent nature of blockchain,” which makes it easier to track fraudulent transactions. In November 2023, the company worked with the DOJ to freeze $225 million in “suspicious transactions” linked to an “international human trafficking syndicate” in Southeast Asia. However, as California prosecutor Erin West pointed out, the seized funds are a drop in the global money laundering bucket, and that “bad actors are so far ahead of us.”

Daren Li, the Shaanxi-born transnational criminal who was sentenced to 20 years in prison by a California court, is currently absconding. He escaped in December by removing an electronic ankle monitoring device. Some media outlets have speculated that Li fled to his luxury villa in Dubai.