Introduction
According to a recent report by the Global Initiative Against Transnational Organized Crime (GI-TOC), Tether’s USDT stablecoin has emerged as a payment method in the illegal gold trade occurring in Venezuela. The report, entitled “Shifting Amazon Gold Flows,” demonstrates how Venezuela has shifted to becoming a primary hub for illegally sourced gold from the Amazon over the past two years. This is a significant change from previous patterns where gold was primarily exported to Brazil and Guyana.
Illicit Gold Trafficking and Money Laundering
The report delves into how this rise in illicit gold trafficking has facilitated the development of new money laundering tactics, notably through the use of cryptocurrencies. This mechanism enables transnational criminals, alongside Venezuelan government officials, to bypass existing sanctions. According to accounts from gold traders in Georgetown, Guyana, some of the gold sourced there is being traded in Venezuela for Tether.
Insights from the Report
Marcena Hunter, a co-author of the report and Head of Extractives at GI-TOC, highlighted in an interview with Decrypt that the use of USDT among illegal gold traffickers has markedly increased over the past year. She noted,
“This underscores the growing importance of stablecoins in illicit transactions worldwide and raises broader concerns regarding the intersection of cryptocurrency and organized crime. As interactions—both legal and illegal—around stablecoins intensify, we anticipate a further evolution of this trend.”
This information supports other findings, including a December report from TRM Labs which pointed to Venezuela’s increasing dependency on USDT in light of international sanctions and domestic inflation. The GI-TOC’s report reveals that gold mining in Venezuela generated over $2.2 billion in revenue in the previous year, becoming a crucial funding source for the Maduro regime during a period of dwindling oil profits due to mismanagement and sanctions.
The Criminal Landscape
Furthermore, the research indicates that within the complex web of Venezuela’s criminal landscape, the illicit gold trade plays a vital role in solidifying ties among high-ranking political leaders, military personnel, and international criminal organizations. The report states,
“The illicit gold trade is ingrained within Venezuela’s criminal ecosystem, intertwining senior government officials, military leaders, and transnational crime groups.”
Legislative Response
In response to these findings, a representative from Tether emphasized the company’s commitment to cooperating with global law enforcement agencies and mentioned their efforts to freeze about $4.3 billion in assets linked to illegal activities. Currently, U.S. lawmakers are considering the Legal Gold and Mining Partnership Act, which is under review by the Senate Committee on Foreign Relations. This legislation aims to mitigate the harmful environmental and social effects of illegal gold mining in the Western Hemisphere, as articulated by Hunter, who pointed out that the bill includes provisions to disrupt the financial flows of those engaged in unlawful gold trading and curb foreign actors from exploiting the U.S. financial system.
Conclusion
To maximize the bill’s efficacy, Hunter argued that it should address the role of cryptocurrencies in laundering proceeds from the illicit gold market. She stressed that any framework developed from this bill should build on prior experiences combatting illegal mineral flows and that significant reforms are essential to enhance the transparency and accountability of gold trading both domestically and internationally.
