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Introduction to the Partnership
On September 10, 2024, TRON, stablecoin issuer Tether, and blockchain forensic firm TRM Labs announced a groundbreaking partnership aimed at tackling illegal transactions involving USDT on the TRON blockchain. This collaboration gives rise to the T3 Financial Crime Unit (FCU), the first initiative of its kind seeking to foster cooperation between public and private sectors in combatting financial crime.
Objectives of the T3 Financial Crime Unit
The T3 Financial Crime Unit has been established with the primary goal of disrupting criminal activities that exploit USDT for illicit purposes. By leveraging cutting-edge technology and law enforcement resources, the FCU aims to track and dismantle networks engaged in these illegal transactions. In a statement, TRON founder Justin Sun emphasized the importance of this collaboration, stating that the partnership ensures that blockchain technology remains beneficial to society while reinforcing the message that illicit activities will not be tolerated.
Current Landscape of TRON Usage
TRON boasts an expansive ecosystem featuring over 240 million users and a remarkable 8.4 billion transactions to date. Recently, TRON has experienced a surge in daily transaction volume, reaching over 8.7 million and nearly hitting 10 million transactions. The community’s super representatives are actively working to lower transaction costs by reducing energy prices, which is expected to take effect soon. However, while TRON’s low fees and stability benefit legitimate users, these same features have also attracted criminal elements, including terrorists, money launderers, and scammers.
Illicit Activities Associated with USDT
The prominence of USDT in criminal activities is substantial, with Cryptonews reporting that it was involved in over $19 billion worth of illicit funds throughout 2023. This figure underscores USDT’s growing association with terrorist financing, surpassing other stablecoins. TRON alone accounted for 45% of all illicit cryptocurrency transactions, a noticeable increase from the previous year. Tether has emerged as the preferred stablecoin for illicit financial activities, overtaking USD Coin (USDC), which recorded significantly lower illicit transaction volumes.
International Cooperation Against Financial Crime
In response to the growing concerns over illegal USDT transactions, the T3 FCU has made significant strides, including freezing over $12 million in USDT linked to various scams, such as blackmail and fraud schemes. This collaborative effort has seen global law enforcement agencies from countries like the U.K., U.S., and Australia join forces with the FCU. Thus far, the unit has identified 11 victims, with ongoing investigations likely to uncover more.
Regulatory Concerns and Market Dynamics
In a related development, Circle, the issuer of USDC, recently announced its decision to stop minting USDC on the TRON blockchain due to risk management concerns. This move aligns with a growing regulatory focus on TRON’s alleged connections to money laundering. Additionally, a letter sent to U.S. Senators by the non-profit watchdog Campaign for Accountability has implicated Circle in facilitating terrorist funding, specifically referencing transactions on the TRON blockchain.
Tether’s Continued Dominance
Despite the regulatory scrutiny and concerns related to illicit activities, TRON continues to play a crucial role in the stablecoin market as Tether persists in issuing USDT on the network. In August, Tether minted an additional $1 billion USDT on TRON, underscoring the blockchain’s significance in global stablecoin circulation. This brought Tether’s total minting for the year to an impressive $33 billion, with $19 billion minted on TRON and $14 billion on Ethereum. With a fixed transaction fee of $1, TRON has firmly established itself as the leading blockchain for USDT transactions, showcasing a circulating supply of $60 billion on its network.
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