Tether announces a new wallet-freezing policy to align its services with US sanctions
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Tether, the company behind the world’s largest stablecoin, USDT, recently announced a new voluntary wallet-freezing policy. The policy comes as part of the company’s efforts to align its service with the United States’ sanctions policies.
Tether decided to take proactive steps and comply with the US sanctions. While it did not publish any figures in terms of how many wallets it froze in order to achieve this, a CoinDesk report says that the platform had already frozen 41 wallets.
The wallets in question are linked to people and entities listed on the Office of Foreign Asset Control (OFAC) Specially Designated Nationals (SDN). The on-chain data was also able to tie one of the frozen wallets to a Ronin Bridge attack, which ended up taking $625 million.
At this time, Tether’s wallet-freezing practice is limited only to the wallets on Tether’s own platform. However, the company intends to extend its reach and include the secondary markets. In doing so, it will support the global law enforcement agencies and regulators.
Tether is expanding its relationship with global regulators
The decision was made to make it more difficult for online criminals to get away with crypto theft and other illicit activities. Tether’s new CEO, Paolo Ardoino, commented on the decision, stating that it aligns with the firm’s “unwavering commitment to maintaining the highest standards of safety” for the project’s global ecosystem.
Furthermore, Ardoino added that Tether intends to expand its close working relationship with regulators and law enforcement agencies around the world. With USDT being the world’s largest stablecoin by far, Tether’s move is also setting an example for others to follow. And, of course, it contributes to the creation of a safer stablecoin ecosystem.
Ardoino explained it by saying: “By executing voluntary wallet address freezing of new additions to the SDN List and freezing previously added addresses, we will be able to further strengthen the positive usage of stablecoin technology and promote a safer stablecoin ecosystem for all users.”
Tether seeks to avoid the issues of crypto exchanges
One interesting thing to note is that Tether’s new policies are in rather sharp contrast to the company’s previous stances on sanctions that involved cryptocurrency. Only a year ago, the firm declined to sanction Tornado cash addresses despite the fact that it defied direct orders from security agencies by doing so.
🚩⛔️ Amazing. Tether has given 0 attention to compliance for 9 yrs. 3 weeks ago the FBI and Secret Service are “onboarded” onto the platform.
Now suddenly they decide to “proactively enforce OFAC sanctions” and freeze wallets.
They’ve been given the final ultimatum. pic.twitter.com/yvIfE1lSX2
— Rho Rider (@RhoRider) December 10, 2023
Many in the crypto industry have found this new behavior strange, given that the company has ignored compliance since it entered the crypto sector.
Tether also did not comment on what brought about the sudden change, although the recent actions against Binance have been flagged as potential catalysts by speculators. The world’s largest crypto exchange by volume managed to reach a settlement with the authorities, but at a high price.
As part of the settlement, Binance has to pay $4.3 billion for violating money laundering laws and sanctions. On top of that, its CEO, Changpeng Zhao, had to step down from his position and permanently distance himself from leadership of the company. Meanwhile, the US authorities kept targeting other platforms, such as Poloniex and Kraken, also citing sanctions violations and issuing massive fines.
