Tether, the issuer of the USDT stablecoin, has partnered with the Tron blockchain and blockchain intelligence firm TRM Labs to create the T3 Financial Crime Unit (T3 FCU).
Announced on Sept. 10, this alliance will help public-private cooperation to fight illicit activities related to the use of USDT on the Tron blockchain.
The T3 FCU will combine TRM Labs’ expertise in anti-financial crime and analytics with Tron’s technical capabilities. Tether will contribute through its external investigations team. The unit’s focus includes tracking transactions associated with terrorism, sanctions evasion, theft, hacking, cybercrime, and fraud.
Since its inception, the T3 FCU has already helped in freezing over $12 million in USDT linked to blackmail scams, investment fraud schemes, and other illegal activities.
Tron is the largest blockchain network for USDT transactions, with $60.8 billion in Tron-based USDT, roughly 51% of all USDT in circulation.
“This collaboration sends a clear message that illicit activity is not welcome in our industry,” said Tron founder and CEO Justin Sun.
USDC’s cessation of support for Tron
A 2023 report from TRM Labs revealed that the Tron blockchain was responsible for nearly 45% of all illicit crypto volume.
In February 2024, Circle, the issuer of USDC, ceased support for the Tron network, citing its commitment to ensuring that USDC remains “trusted, transparent, and safe.” This move followed a report from the United Nations Office for Drugs and Crime, which flagged USDT, particularly on the Tron blockchain, as a vehicle for money laundering in Southeast Asia.
Despite these concerns, Tether continued to mint USDT on Tron. Since February 2024, Tron-based USDT has seen over $10 billion in authorized minting, with another 1 billion USDT tokens minted on Aug. 20.
Earlier in August, a federal judge denied a request from the U.S. Securities and Exchange Commission (SEC) in its ongoing securities fraud lawsuit against the Tron Foundation and Justin Sun.
The case involves allegations that the Tron Foundation, along with the BitTorrent Foundation and Rainberry (formerly known as BitTorrent), violated securities laws.
The SEC alleges that the Chinese entrepreneur and his companies conspired to distribute billions of cryptoassets and artificially inflate trade volumes in order to lure in investors. The federal agency also claims that Sun manipulated the price of BitTorrent’s BTT token.
The SEC sought a pre-trial conference or the filing of an additional response, accusing the Tron defendants of improperly introducing a new defense argument. The defense argued that the sales of Tron’s tokens, TRX and BTT, did not meet the “common enterprise” prong of the Howey Test, which is used to determine whether a transaction qualifies as an investment contract.
