Tether announced that all wallets associated with Venezuela's attempts to circumvent US sanctions on oil exports would be frozen.
The move follows recent reports indicating increased use of Tether's USDT by Venezuela's state-owned oil company, PDVSA, to avoid sanctions imposed by the United States.
Venezuela's PDVSA turns to Tether amid sanctions
Venezuelan state oil company PDVSA has started using Tether's USDT after facing new sanctions on its oil exports, according to a Reuters report.
Tether took a similar stance in December last year, freezing 161 wallets in compliance with US sanctions.
A spokesperson for the stablecoin issuer highlighted the company's commitment to sanctions enforcement, saying: “Tether complies with the OFAC SDN List and is committed to working to ensure that sanctions addresses are properly frozen. »
PDVSA's increased use of cryptocurrency payments is part of a broader strategy to mitigate the fallout from U.S. sanctions reimposed over Venezuela's failure to implement electoral reforms.
By using cryptocurrencies like USDT, PDVSA can transact while minimizing the risk of asset seizure by U.S. authorities. Reuters notes that PDVSA uses intermediaries to hide and evade tracking of USDT transactions.
However, a recent PDVSA scandal has complicated matters, with investigations revealing around $21 billion in unexplained debts from oil exports. This scandal is partly linked to previous transactions involving other cryptocurrencies, which adds to the complexity of the situation.
USDT advance payment for oil trades
In 2024, PDVSA restructured its spot oil transactions to require prepayment of half of the value of each cargo in USDT. This requires new customers interested in purchasing Venezuelan oil to have a digital wallet capable of transacting cryptocurrency.
In addition, the US government has authorized the resumption of activities with PDVSA under certain conditions. The move came in October when Washington issued a six-month license, allowing trading companies and former PDVSA clients to resume business with Venezuela. However, due to digital transaction requirements, many of these entities have had to rely on intermediaries to facilitate transactions.
Venezuela's venture into cryptocurrencies dates back to 2018, when it introduced the “petro” token to ease economic turmoil induced by US sanctions. However, low adoption of the Petro led to its discontinuation earlier this year.
At the same time, OFAC has recently intensified its scrutiny of the cryptocurrency sector. In December, OFAC imposed fines on crypto exchange CoinList amounting to $1.2 million for helping Russian users evade sanctions. Before that, the agency sanctioned a crypto mixer allegedly used by hackers in North Korea.
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