Many believe that Tether dollars are as censorship-resistant as Bitcoins. The Cambodian Huione Group had to learn the hard way that this is not the case. And that’s a good thing. Because it’s not just about fraud – it’s also about slavery.
Most people are probably already aware: the stablecoin Tether has long outperformed Bitcoin in many areas of cybercrime. In particular, Tether is often the currency of choice in the many forms of fraud.
The main difference between Tether and Bitcoin is that the stablecoin is managed by a central issuer, the company Tether. This company has the ability to freeze the digital dollars – and does so. Such as a wallet on which the Cambodian Huione Group stored 29.62 million USDT.
This step followed a report by British analyst Elliptic, who called Huione Guarantee, an online marketplace run by the group, a „multi-billion-dollar marketplace for online scammers.“ Some details of the report make one’s blood run cold.
A Pillar of Southeast Asian Online Fraud
Founded in 2021, the marketplace consists of a network of thousands of channels in messenger apps, each run by the traders. Huione operates the platform and acts as an escrow service to prevent fraud. Payments are usually made in USDT, but bank transfers and payment apps are also used. The language is usually Chinese.
Huione Guarantee was actually intended for legitimate goods, including real estate and cars. „Today, however, most of the goods and offers are aimed at operators of cyber fraud.“ The marketplace seems to have become a pillar of the thriving ecosystem of scammers in Southeast Asia, which often originate from China and operate in Myanmar, Laos, and Cambodia. This „ecosystem“ has grown rapidly over the past five years and today generates annual revenue of tens of billions of dollars on the backs of millions of naive victims.
Why Scammers Need Electronic Ankle Braces
On Huione Guarantee, scammers mainly find two types of offers: First, money laundering. According to Elliptic, the largest category of traders on the marketplace offers to exchange and move money. Many offer to receive money – including that of scam victims – to transfer it across borders and convert it to other means, such as cash, stablecoins, or deposits on Chinese payment apps.
The second category of products consists of security or prison-related items. For example, tear gas, electric batons, or electronic ankle braces. The connection to the scammers is bitter. Because the scammed are not the only victims of the scam:
„Many reports suggest that the scams also include prisons that serve both as workplaces and living quarters, surrounded by barbed wire and actively guarded by security forces. Hundreds of thousands of workers live in them, many effectively enslaved. These are young men and women from China, Vietnam, the Philippines, and many other countries who were lured to the region with promises of well-paid work and forced to carry out the fraud.“ So, the scam is based on human trafficking and slavery.
A Cousin of the Prime Minister
Not much less bitter is another background of Huione. According to Elliptic, the marketplace has many characteristics of a darknet market but is run by a large Cambodian corporation: the Huione Group. The group is primarily active in the finance and payments sector, handling payments, exchanging money, and being involved in insurance, airlines, and real estate.
One of the directors of Huione Pay, the division of the corporation that runs the marketplace, is Hun To, a cousin of Cambodia’s current Prime Minister, Hun Manet. Hun To has connections to organized crime in China and is suspected of smuggling heroin and laundering money.
Since 2021, Huione has processed $11 billion. Not all of it is involved in fraud, but, according to Elliptic, a significant portion is. The criminal connections of Huione were only revealed through crypto payments themselves. „Unlike non-crypto payments, which are also used on the platform but do not benefit from blockchain transparency, investigators can proactively identify and interrupt payments in USDT.“
Tether cooperates by freezing wallets associated with Huione. But given the inhumane practices and reach of the scams, this is likely just the tip of the iceberg.