$4 million Kenyan bank theft linked to USDT laundering: report
Stablecoin adoption has skyrocketed in Africa, where use cases span cross-border remittances, payments, and hedging against depreciating local currencies. However, their use in crime is also on the rise.
In Kenya, cybercriminals who stole over $4 million from a local bank reportedly laundered the proceeds through USDT and decentralized platforms. Meanwhile, in Nigeria, authorities are sounding the alarm about politicians concealing their embezzled funds in digital asset wallets.
$4M from Kenyan bank heist laundered via USDT
The Kenyan Financial Reporting Centre (FRC) recently revealed that one unnamed local bank lost Kshs. 517 million (just over $4 million) in a cyber heist that breached its card security system. The bank was reportedly targeted by its security contractors, who downgraded its security configurations, enabling them to bypass protocols such as one-time passwords.
After altering the system, the criminals generated new digital wallets, which they used to siphon funds from customer accounts. They then used the funds to purchase the USDT stablecoin, which they transferred across several decentralized platforms, limiting authorities' ability to track the funds.
FRC didn't reveal the bank, the contractors, or the decentralized platforms the criminals used to launder the funds.
However, USDT's role in criminal activities isn't new, with the stablecoin steadily replacing BTC as cybercriminals' favorite digital asset. In recent years, one exposé after another has revealed that criminals—from pig butchering fraudsters in Southeast Asia to hackers in North Korea—have been relying on USDT and loosely regulated Caribbean banks to launder billions of dollars.
Just over a month ago, the U.S. Department of Justice (DOJ) filed a civil complaint to seize over $225 million linked to digital currency scams, with a majority being in USDT. A week prior, the DOJ charged the founder of a digital currency platform with laundering over $500 million for criminals via USDT. Even the UN has decried the use of USDT in pig butchering scams, underground casinos, and other forms of organized crime.
Back in Kenya, digital asset crime has been rising as adoption skyrockets. Kenyan investors were second only to Nigeria in funds lost to CBEX, a scam that made off with $800 million. The East African nation's loose digital asset regulations also landed it on the FATF's grey list last year. The government immediately formed a 'crypto' working group to resolve the FATF's concerns, but it has yet to be taken off the list.
Nigerian politicians hide loot in 'crypto'
In Nigeria, the country's anti-graft watchdog has accused corrupt politicians of hiding embezzled funds in digital asset wallets.
Ola Olukoyede, who chairs the Economic and Financial Crimes Commission, alleged that these politicians see digital assets as untraceable, making them the go-to conduit for stashing illicit wealth.
'Our findings show that fraudulent politicians are already perfecting schemes to hide their loot in cryptocurrencies to evade the investigative dragnets of anti-corruption agencies. Stolen funds and unexplained wealth are being warehoused in wallets, and payments for services are now made through this window,' he said in his speech at an event marking the Africa Anti-Corruption Day.
Nigeria is Africa's largest digital assets market; last year, it accounted for nearly half of all digital asset transaction volume on the continent.
The West African nation is also one of Africa's most corrupt. With a 26 out of 100 score in last year's Transparency International's Corruption Perceptions Index, it ranked 140th out of 180 countries.
Nigerian politicians are not the first to turn to digital assets in corrupt dealings. And with more governments warming to the sector, the lines between legitimate innovation and underhanded digital currency deals will only become more blurred.
In the U.S., for instance, scholars and legal experts have criticized President Donald Trump's 'crypto' ventures as corrupt self-enrichment projects.
'Trump's profiting from his presidential memecoin is a textbook example of what the [founders] wanted to avoid,' commented former federal prosecutor Paul Rosenzweig. 'I have never seen such open corruption in any modern government anywhere,' added Harvard University's governance professor Steven Levitsky.
Beyond hiding their loot, Nigerian officials have been accused of taking bribes to advance the interests of some VASPs. During last year's Binance saga, the exchange alleged that government officials demanded a $150 million bribe to release the then-detained Tigran Gambaryan.
Watch: Tech redefines how things are done—Africa is here for it
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