Money Mules to USDT: How India’s Scam Money Vanishes

Someone offers you easy money. All you have to do is let them use your bank account for a few days. You don’t send anything or invest anything. You just lend them the account.

This is how one of India’s biggest money-laundering pipelines starts. Here’s where the money goes after that.

The scale of the problem

Indians lose a huge amount of money to online fraud. In 2025, losses of about ₹19,813 crore were recorded from more than 21 lakh cheating-related complaints, according to the Indian Cyber Crime Coordination Centre (I4C). About 77% of that was lost to fake investment schemes.

Stealing the money is only half the job for scammers. They also have to move it somewhere it can’t be frozen. That process happens in three steps.

Step 1: Rent a bank account

Scammers don’t use their own accounts. They rent accounts from ordinary people, called “money mules.”

The going rate is low. In one Delhi case, police say the accused supplied mule bank accounts and SIM cards to a syndicate for commissions of ₹2,500 to ₹5,000 per account. In Lucknow, many of the account holders worked in restaurants, shops, or on short-term contracts, and some were college students.

The money doesn’t sit in one account. It’s spread across many accounts, very quickly. In one Madhya Pradesh investigation, a victim’s money moved through four layers of mule accounts: 76 accounts in the first layer, 493 in the second, 12,720 in the third, and 7,218 in the fourth. In total, investigators identified 20,507 suspected mule accounts used to launder about ₹21 crore.

The goal is to make the trail so tangled that nobody can follow it.

Step 2: Swap rupees for USDT

This is the step where the money leaves the banking system.

Mule accounts aren’t the end of the line. They’re where the money gets converted. Once the funds arrive, they’re converted into USDT (Tether) through unregulated, non-KYC peer-to-peer networks on the TRC-20 blockchain.

USDT is a stable coin, so it’s always worth about one US dollar. It’s fast, cheap to send on the Tron network, and accepted almost everywhere. For a scammer, it’s digital cash that can cross borders in seconds.

Sometimes honest traders get pulled in without knowing it. The Enforcement Directorate found that fraudsters often bought USDT on Binance’s P2P marketplace using payments that came from scam proceeds. Some sellers allegedly bought USDT cheaply on other exchanges and resold it to the scammers, accepting payments from crime-linked accounts.

Step 3: Send it abroad

Once the money is in USDT, it can leave the country without going through a bank. In the Delhi case, police said the money was layered, converted mainly into USDT, and sent to foreign handlers through encrypted messaging apps. One handler’s IP address was traced to Cambodia.

That fits a wider pattern. About 45% of cyber fraud complaints in 2025 were linked to Southeast Asian countries, including Cambodia, Myanmar, and Laos.

From the scammer’s point of view, the money is now gone for good.

The catch: the blockchain doesn’t forget

This is the part scammers often get wrong. Bank transfers can be hidden across thousands of accounts. A blockchain is different, because every transaction is recorded publicly and permanently.

USDT can also be frozen. Tether says it works with more than 340 law enforcement agencies in 65 countries, and it has frozen more than $4.4 billion in assets overall. This year alone, it froze about $182 million across five Tron wallets in January and more than $344 million across two Tron addresses in April.

India is fighting back on the banking side too. I4C has flagged 24 lakh mule bank accounts. In Gujarat, after a statewide crackdown, first-layer mule accounts, where victims’ money lands first, dropped by 30%.

The gap is between the two systems. Banks can see the rupee side and blockchains show the crypto side, but very few teams connect them. The trail is easiest to break at the point where rupees become USDT, and that’s also where it’s easiest to lose.

What this means for you

• If someone offers to rent your bank account, say no. The commission is small and the risk is serious. Lucknow police detained around 60 young people for questioning because they were the real holders of accounts used in fraud cases worth crores of rupees.

• If you trade USDT on P2P platforms, check who is paying you. A payment from a crime-linked account can get your own bank account frozen, even if you’ve done nothing wrong.

• If you’re an investigator or a compliance team, follow the money past the bank. The case often doesn’t end at the last mule account. It continues on-chain.

Nodestors maps wallet activity across chains and links it to real-world entities, so investigators can follow the money from the moment it becomes crypto. Let’s connect.