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Tether, the creator of the widely-used stablecoin USDT, has declared its plan to freeze addresses linked to sanctioned entities.
This action follows accusations that Venezuela’s state-owned oil firm, PDVSA, has been using Tether to evade sanctions placed on its crude oil and fuel exports.
Tether has stated its dedication to adhering to the Office of Foreign Assets Control (OFAC) sanctions list and ensuring the swift freezing of addresses associated with sanctioned entities.
USDT Utilized to Evade Oil Sanctions
A recent report from Reuters highlighted the alleged use of cryptocurrencies by PDVSA to support its oil exports amid newly reinstated oil sanctions by the United States.
The U.S. Treasury Department has instructed that PDVSA’s customers and suppliers cease transactions by May 31 due to Venezuela’s inability to implement electoral reforms.
According to unnamed sources referenced in the report, the reinstated sanctions will create obstacles for Venezuela in increasing its oil production and exports, as businesses will need U.S. authorizations to engage with the country.
Important
I personally don’t like the sound of this at all.
Tether $usdt vows to freeze assets after Venezuela looks to crypto to bypass oil sanctions
Once this becomes real, this will give a green-light for serious limitations KYC, AML and crackdown on #stables pic.twitter.com/qqgbW6gj3W
— Reda | IPC
(@Reda_IPC) April 23, 2024
To reduce the risk of funds being frozen in international bank accounts as the sanctions take effect, PDVSA has reportedly turned to Tether for its oil transactions.
The report also indicates that PDVSA has modified its spot oil agreements, requiring prepayment in USDT for exported shipments.
Furthermore, the Venezuelan oil company allegedly requires that new clients involved in oil transactions possess cryptocurrency in a digital wallet.
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To fulfill these conditions, companies aiming to resume dealings with PDVSA after obtaining a six-month licensing approval from the U.S. in October 2023 had to depend on intermediaries to facilitate cryptocurrency payments.
These developments follow earlier reports in 2023 that linked cryptocurrency payments to a corruption scandal at PDVSA, which involved the revelation of $21 billion in unaccounted receivables related to oil exports.
By freezing addresses associated with sanctioned entities, Tether seeks to thwart the evasion of sanctions and strengthen compliance initiatives.
Tether Exceeds $100 Billion Market Cap
In early March, Tether’s USDT exceeded a market capitalization of $100 billion, reflecting a notable growth of 9% year-to-date.
In comparison, USDT holds a lead of over $71 billion in market cap relative to its nearest competitor, USD Coin (USDC).
Despite this success, concerns regarding the quality of assets backing USDT have persisted within the crypto community.
A recent United Nations report pointed out Tron’s prevalence in cyber fraud and money laundering activities in Southeast Asia.
Tether has denied these allegations, underscoring its cooperation with law enforcement and the traceability of its token.
Last week, Tether collaborated with digital assets infrastructure provider Fuze to promote education and awareness regarding digital assets in Turkey and the Middle East.
According to the announcement, the two firms aim to tackle various educational aspects within the digital asset sector, including cross-border payment solutions, compliance, regulatory framework development, and education for local financial institutions.
The post Tether to Freeze Addresses Evading Sanctions on Venezuelan Oil Exports appeared first on Cryptonews.
