Stablecoin issuer Tether has announced its intention to freeze wallets associated with the use of USDT to circumvent sanctions on oil exports in Venezuela. This move follows reports from Reuters indicating an uptick in the use of tether by Venezuela’s state-run oil company PDVSA after the reinstatement of U.S. sanctions on oil exports. Tether disclosed that it had frozen 41 wallets linked to individuals or entities listed by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) as Specially Designated Nationals (SDNs) back in December.
A spokesperson for Tether conveyed the company’s commitment to adhering to the OFAC SDN list and ensuring that sanctioned addresses are appropriately frozen. PDVSA’s adoption of USDT began in the previous year and has intensified in response to renewed U.S. sanctions prompted by concerns over Venezuela’s forthcoming election.
Venezuela initiated ventures into cryptocurrencies in 2018, launching the “petro” token in efforts to mitigate economic instability exacerbated by U.S. sanctions. However, lack of adoption led to the shelving of the project earlier this year. Cryptocurrency transactions provide PDVSA and its associates with a means to bypass cash transactions susceptible to U.S. seizure in foreign bank accounts. Reuters has reported PDVSA’s utilization of intermediaries when conducting transactions in tether to increase the difficulty of tracking transfers.
The U.S. Office of Foreign Assets Control has been tightening its oversight of the cryptocurrency industry, exemplified by its imposition of fines on platforms such as crypto exchange CoinList for facilitating Russian users in evading sanctions. In a similar vein, Tether had previously frozen crypto addresses associated with activities related to terrorism and warfare in Israel and Ukraine. However, Tether’s stance on freezing wallets linked to sanctioned coin mixing services like Tornado Cash has been variable, with different actions taken over time.
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