Key Takeaways
- Tether plans to freeze wallets using USDT to bypass US sanctions on Venezuelan oil, responding to PDVSA’s increased use of crypto transactions;
- PDVSA also uses intermediaries to conceal the movement of funds;
- Tether affirms commitment to OFAC compliance.
Tether, the issuer of the stablecoin USDT, has announced its plans to freeze any wallets that use its currency to bypass US sanctions on Venezuelan oil exports.
This decision comes as Venezuela’s state-run oil company, PDVSA, has increasingly turned to Tether to evade these sanctions, which were reinstated to address concerns over Venezuela’s political actions and its upcoming election.
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The PDVSA started using USDT last year to avoid the risks associated with cash transactions, which are vulnerable to being seized by the US in international bank accounts. The company also reportedly employs intermediaries to help conceal the movement of funds and complicate tracking by regulators.
A spokesperson from Tether has emphasized the company’s commitment to complying with the US Treasury Department’s Office of Foreign Assets Control (OFAC) regulations, stating:
Tether respects the OFAC SDN list and is committed to working to ensure sanction addresses are frozen promptly.
The broader context includes OFAC’s growing attention to the crypto sector. In September 2023, the agency froze an Ethereum wallet linked to the Mexican Sinaloa Cartel, which managed a money laundering operation facilitating fentanyl sales.
Last April, it also sanctioned over-the-counter crypto traders helping North Korea’s Lazarus Group, hackers responsible for some of the largest crypto heists.
By aligning its operations with OFAC’s standards, Tether strengthens its position in the financial ecosystem, addressing the challenges introduced by the use of crypto in sanctioned activities.
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