Stablecoin issuer tells Tether CryptoSlate that the company would freeze all addresses linked to sanctioned entities.
The move follows reports that some state actors were mining Tether's USDT tokens to circumvent US sanctions.
A company spokesperson said:
“Tether complies with the Office of Foreign Assets Control (OFAC) SDN List and is committed to working to ensure that sanctions addresses are frozen promptly.”
Over the past year, the company has proactively frozen addresses, holding significant amounts of its digital assets implicated in illegal activity. For example, last year the company froze 32 addresses holding $873,118.34 linked to illicit activities in Israel and Ukraine.
Tether CEO Paolo Ardoino said these actions reflect the company's commitment to setting higher security standards within the emerging industry.
Tether's USDT is the largest stablecoin by market capitalization, with a circulating supply of approximately $110 billion.
Bypass restrictions
Despite Tether's compliance efforts, recent reports indicate continued exploitation of the USDT stablecoin by terrorist groups and sanctioned countries to evade restrictions.
For example, Reuters reported that Venezuela's state-owned oil giant, PDVSA, was mining the USDT stablecoin for crude oil and fuel exports amid renewed U.S. sanctions.
U.S. Deputy Treasury Secretary Adewale Adeyemo recently alerted Congress to Russia's growing adoption of alternative payment methods, such as Tether's stablecoin USDT, to evade economic sanctions.
A United Nations report has highlighted the prevalence of cryptocurrency-based money laundering, primarily through Tether or USDT on the TRON blockchain – with illegal online gaming platforms the main facilitators.
These developments have prompted US Senator Elizabeth Warren to advocate for robust regulatory measures encompassing anti-money laundering authorities for any proposed regulations on stablecoins.
According to the lawmaker, excluding stablecoin issuers, as well as other DeFi intermediaries, from the AML/CFT requirements of any stablecoin legislation would allow bad actors to profit from the increase in crypto trading activity that the law would provide.