Stablecoins Have ‘Increasing Relevance’ in Illicit Amazon Gold Trade: GI-TOC

Tether’s $USDT stablecoin has become a means of payment in the illicit trade of gold into Venezuela, according to a new report from the Global Initiative Against Transnational Organized Crime (GI-TOC).

In the report, titled “Shifting Amazon Gold Flows,” the Geneva-based GI-TOC describes how Venezuela has become “a regional destination” for illegally traded Amazonian gold over the past two years, reversing earlier trends that saw the precious metal move out of the country towards Brazil and Guyana.

The increasing flow of illicit gold towards Venezuela has also been accompanied by the emergence of new money laundering strategies, including the use of cryptocurrencies that help transnational criminals and Venezuelan officials circumvent sanctions.

“Some of the gold originating from Guyana is reportedly sold in Venezuela in exchange for Tether,” write the report’s authors, who base their conclusions on interviews with two gold traders based in Georgetown, Guyana.

GI-TOC’s Marcena Hunter, who co-authored the report and is Head of Extractives at the independent civil-society organization, told Decrypt that its research indicates that illicit gold traders have been using $USDT over the last year.

“This highlights the increasing relevance of stablecoins in global illicit transactions alongside broader concerns about crypto and organised crime,” she said. “Given the increased licit and illicit interaction around stablecoins we expect this trend to develop.”

Such research chimes with reports from other organizations, with a TRM Labs report from December concluding that Venezuela had become increasingly reliant on $USDT amid sanctions and rampant inflation.

GI-TOC’s report notes that gold mining in Venezuela generated just over $2.2 billion in revenue last year, and that it had been providing the Maduro government with a key source of income at a time when mismanagement and sanctions had been reducing oil revenues.

And what the organization’s research suggests is that the Maduro government had used the Venezuelan gold trade to foster loyalty among politicians and security forces, while elements within the government had also coordinated with the criminal groups that had been gaining a growing foothold in the Amazon Basin.

The report reads, “Within Venezuela’s criminal ecosystem, the illicit gold trade plays an influential role, binding together senior political figures, military officials and transnational criminal groups.”

A spokesperson for Tether pointed to its work with law enforcement around the world, including the freezing of around $4.3 billion in assets linked to illicit activity.

Combating illicit gold mining

Congress is currently debating the United States Legal Gold and Mining Partnership Act, which has made it to the Senate Committee on Foreign Relations and which would “reduce the negative environmental and social impacts of illicit gold mining in the Western Hemisphere.”

As Hunter explained, the bill proposes a strategy to tackle illicit gold mining and trading.

“According to the draft bill, the strategy would include combatting and disrupting financing and financial flows of illicit actors involved in illicit gold trading, and preventing foreign persons from benefitting from the US financial system,” she said.

Hunter added that, in order to be effective, the bill should include provisions related to crypto, given the growing role of digital assets in laundering the proceeds of illicit gold transactions.

And more generally, Hunter affirmed that any strategy arising from the passage of the bill will have to build upon past experience in combating the illegal flow of minerals.

She added, “In particular the adoption of systemic reforms needed to render gold trading more transparent and accountable, domestically and internationally.”