Tether Will Freeze Wallets Evading Venezuelan Sanctions

Tether, the stablecoin issuer, has announced it will prevent the use of USDT for bypassing Venezuelan oil export sanctions by freezing associated wallets.

After Reuters announced that Venezuela’s national oil company, PDVSA, raised its reliance on tether following the U.S. restoration of sanctions against their oil exports, the decision was made.

Last year, PDVSA started utilizing USDT more frequently. However, the pace of this usage has significantly increased since the U.S. announced its decision to reinstate sanctions in response to apprehensions regarding Venezuela’s forthcoming election.

In 2018, Venezuela initiated an effort to explore cryptocurrencies and introduced the “petro” token as part of its strategy to address economic turmoil brought about by American sanctions. However, due to insufficient adoption, the petro was put on hold this year.

Transacting with cryptocurrencies like tether enables PDVSA and its business partners to bypass the risk of having their cash frozen in foreign banks by U.S. authorities. According to Reuters, PDVSA employs intermediaries when transferring funds in tether to make these transactions more difficult to trace.

OFAC is privy to the use of crypto, having increased its clamp down on the industry over the past year, fining crypto exchange CoinList $1.2 million for aiding Russian users evade sanctions in December after imposing sanctions on a crypto mixer that was allegedly used by hackers in North Korea.

Last October, Tether prevented access to 32 cryptocurrency accounts linked to terrorist activities in Israel and Ukraine. In contrast, the company refused to restrict access to 32 accounts associated with the sanctioned coin mixing platform Tornado Cash the previous year.