Why Tron has become dominant for illicit finance
The Tron blockchain was designed for high transaction throughput at minimal cost. A USDT transfer on Tron costs a fraction of a US cent and settles in seconds. On Ethereum, the same transfer during periods of network congestion can cost tens of dollars and take minutes.
This fee differential has driven enormous volumes of USDT onto Tron. By 2024, more than 50% of all USDT in circulation was on the Tron network. For legitimate use cases, this means cheap stablecoin transfers. For illicit use cases, it means cheap, fast, and high-volume movement of criminal proceeds.
The regulatory environment surrounding Tron-based businesses has historically been less rigorous than for Ethereum or Bitcoin-focused exchanges. This has attracted exchanges and over-the-counter (OTC) desks operating in jurisdictions with limited AML enforcement — providing easy fiat off-ramps for laundered funds.
USDT on Tron in fraud operations
Pig butchering operations — the dominant form of cryptocurrency fraud by value — have increasingly shifted to Tron-based USDT as their preferred currency. The advantages from a fraud perspective are:
- Victims can be instructed to purchase USDT on Tron at any major exchange and send it to a TRC-20 address
- Transaction fees are negligible even for large volumes
- Consolidation of proceeds from hundreds of victims can happen in seconds
- The Tron ecosystem provides access to OTC desks that will convert USDT to fiat with minimal questions
Ransomware groups have also increasingly shifted to demanding payment in Tron-based USDT or USDC rather than Bitcoin, specifically because Bitcoin's more mature chain analysis infrastructure makes tracing easier.
OFAC and Tron
OFAC has designated several Tron addresses and Tron-based entities, including addresses connected to North Korean cyber operations and sanctioned OTC brokers. Tron's founder Justin Sun has faced significant regulatory scrutiny from US authorities.
Tether (the issuer of USDT) has the ability to blacklist Tron addresses and has done so in response to law enforcement requests and sanctions. As with Ethereum-based USDT, a Tron address on the Tether blacklist is a significant investigative finding.
Tracing on Tron — capabilities and limitations
Tron's blockchain is fully public and explorable through Tronscan (tronscan.org). Transaction data is available through the TronGrid API, making professional tracing technically feasible.
However, there are important limitations compared to Bitcoin and Ethereum tracing:
- Attribution databases for Tron addresses are less mature — fewer exchanges and services have been definitively attributed
- The volume of transactions on Tron is enormous, making manual analysis challenging
- Many of the exchanges and OTC desks used to cash out Tron-based proceeds are in jurisdictions that are difficult or impossible to serve with legal process
Despite these limitations, professional Tron tracing can still provide valuable intelligence — identifying the consolidation pattern of fraud proceeds, flagging sanctioned addresses, and documenting the movement of funds for evidential purposes.
Practical implications for investigators
Any cryptocurrency fraud investigation that originated in or involves USDT should consider whether the Tron network is involved. Key questions:
- Did the victim send USDT to a TRC-20 address (Tron addresses start with T)?
- Were funds converted from BTC or ETH to USDT via a Tron bridge?
- Do any identified exchange deposits involve Tron-based assets?
Kestrel Forensics conducts Tron network analysis as part of multi-chain investigations where USDT flows are involved, and screens all Tron addresses against the OFAC SDN list and the Tether blacklist as standard practice.