Tether, the world’s largest stablecoin issuer, announced a voluntary freeze policy for individuals subject to OFAC sanctions, stepping up its efforts to cooperate with law enforcement.
Tether said this voluntary measure is designed to prevent misuse of Tether’s USDT and strengthen its security measures.
Tether’s Voluntary Freeze Policy
Tether announced the news of its voluntary freeze policy in a blog post on December 9th. The company has begun offering secondary market controls to freeze wallets and wallet activity linked to sanctioned individuals on the U.S. Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) list. All companies and individuals controlled by or associated with sanctioned countries are also included in the list.
Tether said this policy will complement its existing security protocols and is designed to actively collaborate with global regulators and law enforcement agencies.
“On December 1, 2023, the Company decided to launch a new voluntary wallet freeze policy designed to prevent activity involving sanctioned persons on the Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) list. Tether will now provide secondary markets with the sanctions controls it already has in place for wallets on its platform.”
Affected Wallets
According to blockchain data from Etherscan, Tether has frozen 161 Ethereum wallets. Of these, 150 wallets had 0 USDT. It is also unclear whether any of these wallets held USDT at any point in the past. The remaining 11 wallets hold over 3.5 million USDT, but almost all tokens (3.4 million USDT) are held in just one wallet. Blockchain investigator ZachXBT linked the wallet address to the hack of betting platform Stake. The wallet was active just before the freeze and has completed hundreds of transactions over the past week.
Of the remaining wallets, two hold 20,000 USDT each and the third holds approximately 60,000 USDT.
Tether’s changing position
The U.S. Treasury is already using SDN lists to curb cryptocurrency transactions linked to illicit activities, including terrorist financing and unauthorized distribution of fentanyl. Wallets previously added to the SDN list have already been frozen by Tether, a move that contradicts the company’s previous stance on the matter. In 2022, the company said it would not actively freeze authorized addresses associated with Tornado Cash unless instructed to do so by law enforcement. OFAC has repeatedly stated that criminal organizations and individuals have been using Tornado Cash to launder more than $7 billion in cryptocurrency since 2019. Paolo Ardoino, CEO of Tether, commented on this proactive stance:
“This strategic decision is consistent with our firm commitment to maintaining the highest safety standards for our global ecosystem and expanding our close partnership with global law enforcement and regulators. By voluntarily freezing newly added wallet addresses to the SDN list and freezing previously added addresses, we can further strengthen the positive use of stablecoin technology and promote a more secure stablecoin ecosystem for all users. “It will be.”
Tether’s current market capitalization is over $90 billion, indicating strong and growing demand for the USDT stablecoin.
Disclaimer: This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.