Justin Sun, the founder of Tron. Photographer: Joseph Neel/Bloomberg
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Tron is a decentralized autonomous organization behind the blockchain of the same name. Tether Tether, the issuer of the USDT stablecoin. TRM Labs, a San Francisco-based blockchain intelligence company, forms T3 Financial Crimes Unit (T3 FCU), a strategic partnership focused on curbing illegal activities related to USDT on the Tron blockchain We have partnered for this purpose.
“Our goal is to build a safer and more secure cryptocurrency community and set new standards for the industry,” said Tron founder Justin Sun.
Stablecoins like USDT are the lifeblood of the cryptocurrency market, providing liquidity that facilitates everything from everyday trading to institutional trading. However, with a market capitalization of over $118 billion and more than half of USDT’s supply running on Tron, this scale and ease of use have made it attractive to malicious actors. T3 FCU aims to thwart these activities by leveraging data, technology, and close collaboration with law enforcement.
TRM Labs CEO Esteban Castaño said the initiative is an extension of a long-standing partnership. “We were the first blockchain intelligence company to start mapping illegal activity on Tron. We have been partnering in this space since 2019, and this effort takes that even further,” he said. I say. “Tron is also making significant investments in tracking illegal activity, expanding both our investigative and threat intelligence capabilities.” Financial commitments were not disclosed, but the focus is clear. .
As of August, Tron reported hosting over 247 million user accounts and processing over 8 billion transactions. But the same features that make Tron’s USDT attractive to legitimate users – low fees, stability, and ease of use – also attract terrorists, money launderers, and fraudsters. According to TRM Labs’ Illicit Crypto Economy Report released in April, USDT accounted for the largest amount of illegal transactions among stablecoins, reaching $19.3 billion in 2023, representing 1.63% of its total value. . USDC USDC is another major stablecoin, but its illegal trading volume was only $428.9 million, representing 0.05% of the total value.
Additionally, TRM found that 45% of all illegal crypto transactions occurred on Tron last year, up from 41% in 2022. In comparison, Ethereum accounted for 24% of illegal transactions, and Bitcoin accounted for 18%. In March 2023, the U.S. Securities and Exchange Commission accused Tron founder Justin Sun and his company of unregistered offering, sales, and market manipulation involving the TRX TRON and BTT BitTorrent tokens linked to Tron. Three companies were sued. Sun’s legal team disputed the SEC’s claims, arguing that they were outside the SEC’s jurisdiction.
The T3 initiative was launched in July as a direct response to these growing risks. TRM’s blockchain intelligence helps identify and flag suspicious activity, and the Tether and Tron teams take action based on those findings. Already, the division has helped freeze more than $12 million in USDT related to fraud, including extortion and fraud schemes, across three continents. Eleven victims have been identified so far, and more are expected as the investigation progresses.
Chris Janczewski, TRM’s global head of investigations, highlighted the scale of the collaboration: So we already know that many of these situations require a global effort, and I think that people coming together to help will have a huge impact in the months and years ahead. Masu. ”
Tether CEO Paolo Ardoino emphasizes the system’s ability to quickly respond to crimes. “Freezing assets on the blockchain takes minutes. Imagine someone stealing money from a bank, transferring it across jurisdictions, and the ensuing legal delays. That takes a long time. ” he says. “T3 Group is a trio of blockchain analytics companies, blockchain developers themselves, and stablecoin issuers joining forces to focus on blockchain security and reduce latency between blockchains. This is an example of setting up a consortium. From receiving the first piece of information to being able to take action. We would be lucky to find something like this within the traditional international financial system.”
The initiative follows the recent arrest in Paris of Telegram founder Pavel Durov on various charges, including colluding in managing an online platform that enables illegal transactions and refusing to cooperate with law enforcement authorities. The timing is noteworthy. Both Mr. Ardoino and Mr. Sun, who have publicly supported Mr. Durov, are confident in their compliance efforts. “We work with 140 law enforcement agencies in 40 countries. I think it would be very difficult to say that Tether is not working together to the best of its ability,” Ardoino said. .
TRM’s Castaño is optimistic about the long-term impact of this collaboration. “This opens up possibilities. Overall, we are still thinking about how to reduce the risks of cryptocurrencies and are only just beginning to exploit the potential of using the technology itself to do so,” he says. . According to TRM Labs, the trading volume of illegal cryptocurrencies remains low, at less than 1%, but he believes there is an opportunity to bring this number closer to zero. “This is an important first step towards achieving that.”
