January 16, 2024
Aspiring lawyers interested in the intersection of criminal law with fintech and cryptocurrency should follow these growing concerns over fraudulent crypto usage.

What are the UN’s concerns?

The United Nations maintains a number of different task forces focused on recognising legal issues of international prominence. This week, the drugs and crime division has released a report stating that cryptocurrencies are being increasingly used for fraudulent activity. Jeremy Douglas writes in the report that:

“The proliferation of online gambling platforms, e-junkets, and both illegal and underregulated cryptocurrency exchanges in Southeast Asia has changed the game, allowing for faster anonymised movement of funds”.

The activity reported is, more specifically, focused on the region of south-east Asia. This type of money laundering is often linked to romance scams (with one side creating a fake romantic scenario to lure vulnerable individuals into transferring money – known colloquially as ‘pig butchering’).

The UN have also been fairly specific in their criticism of one cryptocurrency in particular – Tether.

What is Tether?

The cryptocurrency at the heart of these fresh fears is Tether. Launched in 2014 via an official whitepaper, Tether is a stablecoin – a subtype where the value of the asset is supposedly pegged to a more stable asset (for example traditional/‘fiat’ money, or commodities like gold). This type of cryptocurrency was traditionally seen as a more reliable and less volatile form of digital currency – in practice, however, a number of stablecoins have demonstrated that this goal is often unattainable.

Regardless, Tether has grown to be the most traded cryptocurrency in the world (with a total circulation of $84 billion) – by trading volume, it commands 64% of the stablecoin market and surpassed Bitcoin five years ago.

This is not the first time that Tether has come under criticism for similar issues. Back in November 2023, the platform was forced to freeze $225 million of assets which had been traced to human trafficking (again, in south-east Asia). The US Department of Justice (DOJ) was involved in this case, and just a day after the initial announcement they seized almost $9 million worth of Tether tokens connected to the illegal activity.



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What other transactions are the UN worried about?

As well as these romance scams, the cryptocurrency market is also being criticised for its role in the huge unregulated casino industry in south-east Asia. The report states:

“Unregulated and underregulated online casino platforms run by junket operators, while profitable in and of themselves, also serve as a useful channel of credit settlement between junkets and their clients, and have been observed to be misused extensively to comingle and disguise proceeds of crime as legitimate online gambling profits”.

In short, illegal gambling syndicates in the region have been utilising cryptocurrencies such as Tether in order to make discreet transactions (often as ways to launder money from other types of crime such as human trafficking) that would otherwise have likely been flagged up by the authorities if transferred using traditional forms of money.

This is a particularly large issue considering the fact that the gambling industry in Asia is huge – it is predicted to grow by 37% over the next few years (by $205 billion).

What can aspiring lawyers learn from this story?

Students (or career changers) looking to a career in law can learn a lot from this constantly developing story. This knowledge can then be utilised in the context of application forms and interviews for work experience placements within the legal industry – whether that be a vacation scheme at a Magic Circle law firm or a pupillage at a top-ranked Chambers.

The first point to note is that, while this article serves as a useful overview (as do many others covering the story), aspiring lawyers should really look to the full report itself (which can be found here) to get a greater sense of the detailed intricacies of the matter (for example, a detailed timeline of how the money laundering actually works in practice).

It is also worth acknowledging that this story deals with the intersection of many different practice areas. This is particularly useful to understand when aspiring to work at a large ‘full-service’ firm which does cross-sell its different practice areas to clients. These concerns over crypto highlights the need for collaboration between teams (itself a key skill for lawyers to use in practice).

First, there are clear public law issues at play here. To what extent should the government get involved in the regulation of cryptocurrency, a digital currency designed for the very purpose of avoiding overly onerous restrictions (though the flip side of that argument is that the outcomes which follow can often be illegal or at least immoral, as is the case here)? There are also numerous jurisdictions at play, which can throw up a variety of questions from a public law perspective (for example, considering aspects of international relations and political affairs rather than purely legal questions).

Furthermore, cryptocurrencies sit in the area of fintech, which itself combines the expertise of lawyers in banking/finance and those focused on emerging technologies (an area which law firms have been particularly in getting closer to in recent years – see in-house incubators like Allen & Overy’s Fuse, or its use of AI chatbots like Harvey). Understanding the complex legal framework (often needing to catch up retrospectively to the technology, which often moves at incredible speed) is a must with rapidly developing, dynamic industries such as this.

Key Takeaways

In conclusion, aspiring lawyers need to be aware of the innate tensions between different areas of law when addressing issues like cross-jurisdictional concerns over crime via cryptocurrency. These are complex topics which are constantly developing, and so maintaining your commercial awareness by following these stories and consistently asking how they relate to the legal industry in practice is a must.

This is not the first time that cryptocurrency in particular has been brought into legal challenges, and it will certainly not be the last – as the technology develops further, more and more angles will need to be considered.

Commercial Awareness Questions

Check out our round-up of commercial awareness questions to challenge you to take a deeper look into this topic.

  • What would your recommendations be for a financial institution that sees its customers use their bank accounts to purchase cryptocurrency?
  • How can lawyers mitigate the risk associated with cryptocurrencies and cross-border transactions?
  • Discuss the legal and regulatory concerns for investors in cryptocurrencies as they are not backed by any centralised issuing authority.


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