Cross-Border Network Used USDT to Move Criminal Proceeds
On October 21, 2026, the U.S. Attorney's Office for the Southern District of New York announced that Colombian cryptocurrency broker Leonardo de Jesus Zuluaga Duque had been sentenced to 160 months in prison for his role in an international money laundering scheme and related criminal activity. According to the Department of Justice, the network involved drug proceeds, cryptocurrency accounts, shell companies in the United States and Colombia, and an unlicensed money transmission business.
Court records described by prosecutors indicate that the group laundered approximately $14.5 million in Tether (USDT) between May and November 2023. Criminal proceeds were converted into USDT and transferred through participants and cryptocurrency accounts. The funds were then converted into U.S. dollars, routed through U.S.-based shell companies to Colombian businesses, converted into local currency, and distributed.
The case illustrates how criminal networks can exploit the speed and accessibility of stablecoin transfers. Yet blockchain transactions rarely tell the entire story on their own. Investigators must connect on-chain movements with the people involved, fiat conversion activity, corporate relationships, and the individuals who ultimately control the funds.
Traceable Transactions Do Not Make Laundering Easy to Detect
Stablecoins such as USDT leave transaction records on public blockchains, providing investigators with important evidence about the movement of funds. However, wallet addresses do not automatically reveal the real-world identities behind them. Criminal networks may also use multiple wallets, exchanges, over-the-counter channels, and corporate accounts to complicate investigations.
KYT systems therefore need to do more than flag individual high-risk addresses. They can help identify relationships between wallets, trace asset flows, and assess transaction patterns against available risk intelligence. An individual transfer may appear ordinary in isolation, while a broader pattern involving linked wallet clusters, known high-risk entities, or suspicious conversion activity may reveal a more concerning picture.
The case also demonstrates the complementary roles of blockchain analytics and traditional financial investigation. Cryptocurrency transaction records can help establish how funds moved, while banking records, corporate registration data, fiat conversion records, and law enforcement evidence can help establish control and purpose. Reliable conclusions require multiple sources of evidence rather than relying solely on a risk label attached to a wallet.
Strengthening Cross-Border AML and KYT Controls
For exchanges, stablecoin service providers, and payment businesses, cross-border laundering cases underscore the importance of ongoing transaction monitoring. Firms should design risk-based controls that reflect their business models, customer profiles, and exposure. Relevant warning signs may include unexplained sources of funds, complex transaction paths, rapid transfers across multiple wallets, and links to high-risk entities.
When an alert is triggered, compliance teams should review it alongside customer due diligence records, transaction context, and information about the origin and destination of funds. Depending on applicable legal requirements, further investigation or a suspicious activity report may be appropriate. Monitoring rules should also be reviewed regularly as illicit networks change their transfer methods and cross-border arrangements.
Firms should maintain complete investigation records, including the signals that triggered an alert, the supporting analysis, the results of human review, and the final decision. Combining blockchain analytics with customer risk assessments and fiat transaction monitoring can help businesses identify complex financial flows, improve investigative efficiency, and reduce the risk of being exploited as a channel for criminal proceeds.