Illegal drug payments now made through cryptocurrency, agencies say

MANILA — Drug traffickers have been using a cryptocurrency platform to transact payments, authorities said on Tuesday. 

Cybercrime Investigation and Coordinating Center (CICC) Executive Director Alexander Ramos said that the USDT or Tether platform is being used in drug payment. 

"Most of those we see are USDT. It's a platform that they're using. Of course, they're using local channels first. Using the wallets, e-wallets before they convert it to crypto," Ramos said.

USDT is a stablecoin whose value is pegged to the US dollar. Unlike other cryptocurrencies like Bitcoin and Ethereum whose values are prone to wild swings depending on market sentiment, USDT's value depends on the dollar. One USDT can be exchanged for $1.

According to Investopedia, USDT's value is backed by the dollar reserves of Tether, a company owned by iFinex, the Hong Kong-registered company that also owns the crypto exchange BitFinex.

Crypto exchange Coins.Ph meanwhile said that as of February 2022, USDT was the largest stablecoin by cryptocurrency market capitalization and volume.

It is available on most digital blockchain networks or via interoperable swaps or exchanges, Ramos said.

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Philippine Drug Enforcement Agency (PDEA) Officer-in-Charge Assistant Secretary Renato Gumban noted drug payments used to be from bank to bank. However, in recent years, he said that tracing transactions has become more difficult due to the use of cryptocurrency. 

"It's a bit difficult. It needs technology. We need CICC there," Gumban said as he highlighted the significance of a memorandum of agreement with CICC. 

The use of crypto in the illegal drug trade was revealed during the signing of the memorandum of agreement between the two agencies on Tuesday at the National Cybercrime Hub in Bonifacio Global City, Taguig City.

Ramos said that CICC started to be involved in probing drug-related cybercrimes early last year by tracking down the payment system. 

"This is the exchange of money. So, because of this, we were able to develop a cycle how drug money or drug trade is using cryptocurrency," he said. 

CICC pledged to provide resources and technical expertise to PDEA representatives to facilitate data sharing with agencies relevant to the investigation and prosecution of drug-related activities. 

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