Tether, the issuer of the popular stablecoin USDT, has announced its intention to freeze addresses associated with sanctioned entities.
The move comes in response to allegations that Venezuela’s state-run oil company, PDVSA, has been utilizing Tether to bypass sanctions imposed on its crude oil and fuel exports.
Tether has said it is committed to complying with the Office of Foreign Assets Control (OFAC) sanctions list and ensuring the prompt freezing of addresses linked to sanctioned entities.
USDT Used to Bypass Oil Sanctions
A recent Reuters report shed light on the alleged use of cryptocurrencies by PDVSA to facilitate its oil exports amidst newly reimposed oil sanctions by the United States.
The U.S. Treasury Department has mandated that PDVSA customers and providers wind down transactions by May 31 due to Venezuela’s failure to implement electoral reforms.
According to anonymous sources cited in the report, the reimposed sanctions will pose challenges for Venezuela in expanding its oil production and exports, as companies will require U.S. authorizations to conduct business with the country.
Important
I personally don’t like the sound of this at all.
Tether $usdt vows to freeze assets after Venezuela looks to crypto to bypass oil sanctions
Once this becomes real, this will give a green-light for serious limitations KYC, AML and crackdown on #stables pic.twitter.com/qqgbW6gj3W
— Reda | IPC (@Reda_IPC) April 23, 2024
In an effort to mitigate the risk of funds being frozen in foreign bank accounts as the sanctions take effect, PDVSA has reportedly turned to Tether for its oil sales.
The report further reveals that PDVSA has restructured its spot oil deals, requiring prepayment in USDT for exported cargo.
Additionally, the Venezuelan oil company allegedly mandates that new customers engaging in oil transactions hold cryptocurrency in a digital wallet.
To meet these requirements, companies seeking to resume business with PDVSA after receiving a six-month licensing approval from the U.S. in October 2023 had to rely on intermediaries to facilitate cryptocurrency payments.
These developments follow previous reports in 2023 that tied cryptocurrency payments to a corruption scandal at PDVSA, involving the discovery of $21 billion in unaccounted receivables related to oil exports.
By freezing addresses associated with sanctioned entities, Tether aims to prevent the circumvention of sanctions and reinforce compliance efforts.
Tether Surpasses $100 Billion Market Cap
In early March, Tether’s USDT surpassed a market capitalization of $100 billion, with an impressive growth of 9% year-to-date.
Comparatively, USDT maintains a lead of over $71 billion in market cap when compared to its closest competitor, USD Coin (USDC).
Despite the success, concerns about the quality of assets backing USDT have lingered in the crypto space.
A recent United Nations report highlighted Tron’s popularity among cyber fraud and money laundering activities in Southeast Asia.
Tether has refuted these claims, emphasizing its collaboration with law enforcement and the traceability of its token.
Last week, Tether partnered with digital assets infrastructure provider Fuze to enhance education and awareness surrounding digital assets in Turkey and the Middle East.
Per the announcement, the two companies aim to address various aspects of education within the digital asset realm, including cross-border payment solutions, compliance, regulatory framework development, and education for local financial institutions.
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