Stablecoin publisher Tether said this CryptoSlate that the company would freeze all addresses associated with sanctioned entities.
This decision comes in response to reports indicating that some state actors were using Tether’s USDT tokens to circumvent US sanctions.
A company spokesperson said:
“Tether respects the Office of Foreign Assets Control (OFAC) SDN list and is committed to ensuring that sanctions addresses are frozen immediately.”
Over the past year, the company has proactively frozen addresses and retained significant amounts of its digital assets involved in unlawful activity. For example, last year the company froze 32 addresses worth $873,118.34 linked to illegal activities in Israel and Ukraine.
Paolo Ardoino, CEO of Tether, said these actions reflect the company’s commitment to creating 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 circumvent restrictions.
For example, Reuters reported that Venezuelan state oil giant PDVSA used the USDT stablecoin to export crude oil and fuel amid renewed US sanctions.
US Deputy Treasury Secretary Adewale Adeyemo recently warned Congress about Russia’s escalating adoption of alternative payment options, such as Tether’s USDT stablecoin, to evade economic sanctions.
A United Nations report highlighted the prevalence of cryptocurrency money laundering, mainly through Tether or USDT on the TRON blockchain – with illegal online gambling platforms as the main enablers.
These developments prompted US Senator Elizabeth Warren to call for robust regulatory measures, including anti-money laundering authorities for any proposed stablecoin regulations.
According to the lawmaker, excluding stablecoin issuers, along with other DeFi intermediaries, from the AML/CFT requirements of the stablecoin law would allow bad actors to take advantage of the increase in crypto trading activity that the law would provided.