Stablecoin issuer Tether has announced that they will freeze any addresses linked to sanctioned entities. This move comes after reports revealed that state actors were using Tether’s USDT tokens to bypass US sanctions. A spokesperson for Tether stated that the company respects the Office of Foreign Assets Control (OFAC) SDN list and is dedicated to swiftly freezing sanction addresses.
In the past year, Tether has taken proactive measures to freeze addresses holding significant amounts of digital assets involved in illegal activities. For example, the company froze 32 addresses holding $873,118.34 related to illicit activities in Israel and Ukraine. Tether’s CEO Paolo Ardoino emphasized that these actions demonstrate the company’s commitment to establishing higher safety standards in the industry.
Despite Tether’s efforts to comply with regulations, recent reports have indicated the ongoing exploitation of the USDT stablecoin by terrorist organizations and sanctioned nations to evade restrictions. In one instance, Venezuela’s state-owned oil company, PDVSA, reportedly used USDT for crude oil and fuel exports amidst renewed US sanctions. The US Treasury Deputy Secretary Adewale Adeyemo also raised concerns about Russia’s increasing use of alternative payment methods, including Tether’s USDT stablecoin, to circumvent economic sanctions.
A United Nations report highlighted the prevalence of cryptocurrency-based money laundering, particularly through Tether or USDT on the TRON blockchain, with illegal online gambling platforms being major facilitators. These developments have led US Senator Elizabeth Warren to push for rigorous regulatory measures that include anti-money laundering authorities for any proposed stablecoin regulations. Warren argues that excluding stablecoin issuers and other DeFi intermediaries from AML/CFT requirements in stablecoin legislation could allow malicious actors to exploit the surge in crypto trading that such laws would bring.
The use of stablecoins in money laundering and terrorism financing remains a significant concern. While Tether has taken steps to freeze addresses linked to sanctioned entities, reports indicate that illicit actors continue to exploit stablecoins for illicit activities. Regulatory authorities and policymakers must remain vigilant and implement robust measures to prevent the misuse of stablecoins for criminal purposes.