With low, cross-border transaction fees, the stablecoin Tether (USDT) has become an important part of Cambodia's underground economy, even though the government has officially banned trading of this cryptocurrency.
According to SCMP , at some locations in Phnom Penh where Chinese people frequent, signs advertise 24/7 exchange services of Chinese Yuan for USDT , which is the preferred cryptocurrency. Popular for moving money in and out of China, used in gambling activities, as well as liquidation for online fraud activities in Southeast Asia.
While mainstream currency exchanges in Phnom Penh are providing trading services and solutions, aiming to circumvent China's currency control regulations for the Chinese community, USDT still plays an important Vai in Cambodia's vast underground economy, and is gradually becoming the subject of close scrutiny.
In November, the US Department of Justice confiscated nearly $9 million in connection with online scams, after investigating cryptocurrency wallets and exchanges. Tether Holdings, the USDT issuer, also announced that it has frozen an additional 225 million USDT related to online scams in Southeast Asia called 'pig butchering'.
SCMP reports that the US government and Tether do not specifically disclose where they trace assets, or the owners of cryptocurrency wallets that receive funds. However, Southeast Asia has been identified as a hub for online game money laundering and fraud schemes, especially Laos, Myanmar and Cambodia.
According to Mr. Ngo Minh Hieu, Vietnam National Cyber Security Center and security expert of Vietnam Blockchain Association, “the complex characteristics of cryptocurrencies have created ideal conditions for fraud and scam schemes. Ponzi system, targeting uninformed investors.”
Even the operators of the cryptocurrency exchange and the online USDT exchange in Phnom Penh admit that they are operating a parallel underground financial service in a developing economy. An exchange owner said: “We are a shadow bank. Questions about customer privacy are sometimes impossible to answer.”
In addition, among the restaurants, fashion salons and barbershops for Chinese residents, there are more than 10 shops with signs advertising currency exchange in Chinese, with prices around 7 Yuan each. USDT. However, before participating in trading, people always remind each other about 'the risks of cryptocurrency in Cambodia'.
“A lot of people lose money on their phones, you have to be careful,” one employee said.
Expert Ngo Minh Hieu also noted that there is no absolute safety in this chaotic cryptocurrency world. “Hacks on cryptocurrency exchanges and wallets are also a significant risk,” he said.
Buy and sell SIM cards and personal data
It is impossible to estimate the scope of Tether 's impact on the Cambodian economy. However, globally, there are currently about 84 billion USDT in circulation.
Banks, exchanges and technology platforms in Cambodia are developing strongly. Promises of a smooth and reliable digital solution to cash flow problems are easily promoted through social media and encrypted channels.
A financial platform registered in Cambodia, called Huione Pay, operates as an online bank, accepting and trading USDT with customers through Telegram channels, with dozens of different “trading groups”.
Many stores also accept USDT to offer diverse products and services, from selling mobile SIM cards to advertising and selling data related to Chinese people in many parts of the world. However, determining the legality of these activities is not an easy task. Some encrypted chats also show that USDT is also accepted in most deposits and transactions in underground commerce.
Security experts say that the appeal of USDT to criminal groups in Southeast Asia is undeniable.
“In some ways, the perfect operating conditions for criminals have been created in the border areas and special economic zones here,” said Jeremy Douglas, Regional Representative of the Reporting Office. Drugs and Crime United Nations. He explained that cryptocurrencies – especially USDT traded on the TRON platform – are heavily used by online criminals, while authorities in the region are currently unable to keep up.
“The capabilities of criminal groups operating online gaming, fraud, money laundering and shadow banking are far more advanced than those of most law enforcement agencies in Southeast Asia,” Douglas noted. idea.
On December 8, the US, UK and Canadian governments imposed sanctions on 14 individuals and businesses involved in online fraud and human trafficking in Cambodia, Laos and Myanmar. The list includes Cambodia-registered businesses such as ZhengHeng Group Co Ltd, Heng He Casino, KB Hotel, Pacific Real Estate Management Co and Golden Sun Sky Co Ltd. Individuals such as Cambodian businessman Hum Sovanny; two Chinese citizens seeking refuge in Cambodia are She Zhijiang and Dong Lecheng.
Out of control
The National Bank of Cambodia has applied blockchain technology to enable QR payments and transfers through registered banks. However, cryptocurrency has been banned in Cambodia since 2017.
Meas Soksensan, spokesman for Cambodia's Ministry of Economy and Finance, said he was not informed about the investigation into Tether conducted by the US, and the National Bank of Cambodia could not comment.
Cryptocurrencies are spreading at casinos in Cambodia, which are mainly used by Chinese people to escape gambling bans at home – as well as on a variety of online gambling sites operating in the country. This Southeast Asian country. Meanwhile, Cambodia's billions of dollars worth of online fraud has exploded from casinos in the capital Sihanoukville and areas adjacent to Vietnam, Laos and Thailand.
In a September report on online casinos and scams in Southeast Asia, the United Nations Office on Crime and Drugs said cryptocurrencies are increasingly being used in informal financial flows. France. An estimated $7.5 billion to $12.5 billion in total illegal money is circulating through the unnamed Southeast Asian country.
Although Cambodia banned its growing online gambling industry in 2020, the sites easily continued to operate.
Ben Lee, co-founder of IGamiX Management and Consulting, a regional gaming industry consultancy, said that cryptocurrencies have integrated into the gambling industry due to the simplicity of transferring money across borders. gender.
“I think most governments in Asia... are not ready for this development,” he said. “Casinos are more interested in revenue than the nature of the money flowing through their platforms,” he said.
Meanwhile, Jonny Ferrari, an American businessman who has worked in the Cambodian gambling industry since 2015, explained that USDT seems to be the cryptocurrency of choice for online gambling businesses to serve their needs. in the Chinese market, it also allows criminals to launder money through many front companies.
"No one has the ability to trace that far," he assessed.
