Taiwan Authorities Arrest Four in $1.5 Million Tether Scam

Four people face charges in Taiwan for allegedly orchestrating a cryptocurrency scam that tricked victims into purchasing over NT$50 million (about US$1.5 million) worth of Tether (USDT), the popular stablecoin.

The Keelung District Prosecutors’ Office said the suspects, identified only as Li, Hong, Dai, and Zhang, worked with overseas fraud groups to target victims through LINE chat groups, according to a September 5 Taiwan News report.

Scammers First Tried to Sell Victims on Stocks

Posing as investment advisors, the scammers first persuaded people to invest in stocks. Then, having gained the victims’ trust, they shifted the conversation to cryptocurrency.

The four suspects then greased the rails for the illicit transactions by showing victims how to buy Tether and set up cryptocurrency wallets. They made fake websites and apps to verify the transactions and build trust further.

Then, after the victims transferred funds to buy up Tether, the suspects withdrew the money and delivered it to the scam’s leaders.

At least 10 victims have been identified so far, with the largest individual loss over NT$4 million (around US$144,000).

Tether is the most popular stablecoin on the market. By design, one Tether token should be equal to one US dollar. Its next biggest competitor, Circle’s USDC, has around half the market cap. It, too, has not received an audit.

However, Tether is controversial due to questions about whether it has enough dollar reserves to back all tokens in circulation.

The suspects have admitted to prosecutors that they engaged in organized fraud, money laundering, and other crimes. The Keelung District Court approved the detention of all four. Prosecutors are continuing to investigate whether more victims were caught up in the scam.

Tether Gives Strange Reasons for Lack of Audit

The news comes only days after Tether’s CTO, Paolo Ardoino, gave curious reasons for the issuer’s lack of an audit. And for its reliance on attestations, which, many believe, are less trustworthy.

In an interview with The Defiant, Ardoino said an audit was “pretty simple for a stablecoin.” However, Ardoino blamed the Big Four accounting firm’s fear of crypto as the main reason.

Speaking to Camilla Russo, Ardoino said:

“People are making fun of us because we are taking ages, but the reality of things is that if you look at the top four auditing firms, they are afraid to take on a stablecoin, especially one as big as Tether, as a customer.”

Ardoino attributed the apprehension to the anti-crypto stance of US politicians. Alluding to the current SEC leadership, which its hard-line approach to regulation and zest for bringing lawsuits.

“The issue is reputational,” Ardoino added.