Tether, Tron and TRM Labs join forces to fight crypto crime

Tron, the decentralized autonomous organization behind the blockchain of the same name; Tether
Holding strap
Issuer of the USDT stablecoin, and TRM Labs, a San Francisco-based blockchain intelligence company, have joined forces to form the T3 Financial Crime Unit (T3 FCU) – a strategic alliance focused on curbing illicit activities related to USDT on the Tron blockchain.

“Our goal is to create a safer crypto community and set a new standard for the industry,” says Tron founder Justin Sun.

Stablecoins like USDT are the lifeblood of crypto markets, providing the liquidity that powers everything from everyday transactions to institutional trades. But with a market cap of over $118 billion and more than half of USDT's supply running on Tron, this size and ease of use have made it a magnet for malicious actors. The T3 FCU aims to disrupt this activity by leveraging data, technology, and close cooperation with law enforcement.

Esteban Castaño, CEO of TRM Labs, points out that the initiative is an extension of a long-standing partnership. “We were the first blockchain intelligence company to start mapping illicit activity on Tron – we've been working together on this front since 2019, but this initiative takes it a step further,” he says. “Tron is also making significant investments in tracking illicit activity, so we're expanding both our investigative and threat intelligence capabilities.” While the financial commitment was not disclosed, the focus is clear.

In August, Tron reported that it hosts over 247 million user accounts and processes more than 8 billion transactions. However, the same qualities that make USDT on Tron attractive to legitimate users – low fees, stability, and ease of use – have also attracted terrorists, money launderers, and scammers. According to TRM Labs' Illicit Crypto Economy report published in April, USDT accounted for the largest illicit volume among stablecoins, reaching $19.3 billion, or 1.63% of the total, in 2023. USDC
USDC
another major stablecoin, only had an illicit volume of $428.9 million, which is 0.05% of the total volume.

In addition, TRM found that 45% of all illegal crypto transactions took place on Tron last year, up from 41% in 2022. By comparison, Ethereum accounted for 24% of illegal transactions, and Bitcoin
Bitcoin
for 18%. In March 2023, the U.S. Securities and Exchange Commission sued Tron founder Justin Sun and three of his companies, alleging they engaged in unregistered offers, sales, and market manipulation related to Tron-linked TRX
TRON
and BTT
BitTorrent
Token. Sun's legal team has disputed the SEC's claims, arguing that they are outside the agency's jurisdiction.

The T3 initiative was launched in July in direct response to these growing risks. TRM's blockchain intelligence helps identify and flag suspicious activity, while Tether and Tron teams take action based on those insights. The unit has already helped freeze over 12 million USDT related to scams – including extortion and fraud schemes – across three continents. 11 victims have been identified so far, and more are expected as investigations continue.

Chris Janczewski, head of global investigations at TRM, underlines the extent of the collaboration: “The first three successful disruptions involved agencies in the UK, US and Australia. So we are already seeing that a global effort is needed in many of these situations and I think it will be very powerful in the coming months and years if people come together to help.”

Paolo Ardoino, CEO of Tether, emphasizes the speed with which the system can respond to crimes. “Freezing assets on a blockchain takes only minutes. Imagine someone stealing money from a bank, transferring it across jurisdictions and the legal delays that result – that takes forever,” he says. “The T3 group is an example of three parties – a blockchain analytics company, the blockchain developer itself and the stablecoin issuer – joining forces to create a consortium focused on blockchain security and reducing the latency between the moment we get the first piece of information and the moment we can perform the action. Good luck finding something like that in the traditional international financial system.”

The timing of this initiative is notable after Telegram founder Pavel Durov was recently arrested in Paris on a number of charges, including complicity in managing an online platform to facilitate illegal transactions and refusing to cooperate with law enforcement. Both Ardoino and Sun, who have publicly supported Durov, remain confident in their own compliance efforts. “We are working with 140 law enforcement agencies in 40 different countries. I think it would be very, very difficult to say that Tether is not cooperating to the extent that it can,” Ardoino says.

TRM's Castaño is optimistic about the long-term impact of the collaboration: “This expands the possibilities. Together we are still figuring out how to mitigate the risk in cryptocurrencies, and we are just beginning to realize the potential of the technology itself to do that,” he says. Although illicit crypto volume remains low – less than 1%, according to TRM Labs – he sees an opportunity to bring that number closer to zero. “This is an important first step to achieving that goal.”