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The issuer of the largest stablecoin USDT, Tether, announced the decision to freeze wallets found using USDT to evade sanctions applied to Venezuela’s oil exports. This measure came after a report by Reuters, which revealed an increase in the use of USDT by Venezuela’s state oil company PDVSA following the reimplementation of U.S. sanctions on oil exports.
Wallets to Be Frozen to Protect Against Venezuela Sanctions
In response to these developments, Tether had already taken action in December of the previous year by freezing 41 wallets connected to individuals listed on the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) list. Following the Reuters report, a Tether spokesperson reiterated the company’s commitment to comply with the OFAC SDN list, emphasizing the importance of appropriately freezing wallets associated with sanctioned entities and indicated ongoing measures to freeze wallets used to circumvent Venezuelan sanctions.
Data shows that PDVSA’s use of USDT peaked last year and intensified following the U.S. decision to reimpose sanctions due to concerns over Venezuela’s upcoming elections. PDVSA and its partners have been utilizing cryptocurrencies to conduct transactions without the risk of U.S. seizure of funds held in foreign bank accounts. Reuters reported that PDVSA used intermediaries to obscure the trail of USDT transactions.
Venezuela’s foray into cryptocurrencies as part of efforts to address economic instability exacerbated by U.S. sanctions dates back to 2018 when it introduced the “Petro” token. However, the adoption of Petro faced significant obstacles, and the project was shelved earlier this year.
The History of Tether’s Wallet Freezing
The use of cryptocurrencies to evade sanctions has drawn scrutiny from regulatory authorities, including OFAC, which has increased sanctions within the cryptocurrency industry. OFAC, in particular, has imposed fines on entities like the cryptocurrency exchange CoinList for facilitating illegal transactions that helped Russian users evade sanctions, including a fine of 1.2 million dollars.
It is important to note that Tether’s actions demonstrate consistency with its previous approach to compliance and regulatory obligations. The stablecoin issuer has previously made headlines for freezing cryptocurrency addresses linked to terrorism in regions like Israel and Ukraine. However, Tether’s approach has also shown versatility, as evidenced by its past decision not to freeze wallets associated with sanctioned cryptocurrency mixing services like Tornado Cash.
