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

The Tether (USDT) stablecoin has become a significant payment method in the illicit trade of gold into Venezuela, according to a new report by the Global Initiative Against Transnational Organized Crime (GI-TOC). Over the past two years, Venezuela has transformed into a regional hub for illegally sourced Amazonian gold, reversing previous smuggling patterns.

Emergence of New Money Laundering Strategies

The increasing influx of illicit gold into Venezuela has coincided with the adoption of novel money laundering techniques. These methods, including the use of cryptocurrencies like USDT, enable transnational criminals and Venezuelan officials to bypass international sanctions. The GI-TOC report, based on interviews with gold traders, indicates that USDT has been used in exchange for gold originating from Guyana over the past year.

Growing Relevance of Stablecoins in Illicit Transactions

Marcena Hunter, co-author of the report and Head of Extractives at GI-TOC, highlighted the growing importance of stablecoins in global illicit transactions. She noted that this trend underscores broader concerns regarding the intersection of cryptocurrencies and organized crime, predicting further development in this area due to increased legitimate and illicit interactions with stablecoins.

This finding aligns with previous reports, such as one from TRM Labs in December, which concluded that Venezuela's economy has become increasingly dependent on USDT amidst sanctions and high inflation.

Illicit Gold Trade's Role in Venezuelan Economy and Governance

The GI-TOC report indicates that gold mining in Venezuela generated over $2.2 billion in revenue last year, serving as a crucial income source for the Maduro government amidst declining oil revenues due to mismanagement and sanctions. The Venezuelan gold trade has reportedly been instrumental in fostering loyalty among politicians and security forces. Furthermore, elements within the government are alleged to have coordinated with criminal groups expanding their influence in the Amazon Basin, with the illicit gold trade playing a pivotal role in binding together senior political figures, military officials, and transnational criminal groups within Venezuela's criminal ecosystem.

Legislative Efforts to Combat Illicit Gold Mining

In response to these issues, the United States Congress is considering the United States Legal Gold and Mining Partnership Act. This bill, which has advanced to the Senate Committee on Foreign Relations, aims to mitigate the negative environmental and social impacts of illicit gold mining in the Western Hemisphere. The proposed strategy includes disrupting the financing and financial flows of illicit actors involved in gold trading and preventing foreign individuals from benefiting from the U.S. financial system.

Hunter emphasized that for the bill to be effective, it must incorporate provisions addressing cryptocurrencies, given their increasing use in laundering proceeds from illicit gold transactions. She also stressed the need for systemic reforms to enhance transparency and accountability in gold trading, both domestically and internationally, building upon past experiences in combating the illegal flow of minerals.