It is a remarkable development in the crypto world. The stablecoin Tether (USDT) issuer has taken a proactive stance in supporting U.S. law enforcement agencies. The company recently announced that it had frozen 326 wallets containing a total of $435 million in USDT at the behest of U.S. authorities. This decisive action, highlighted in a letter, marks Tether’s commitment to assisting in the fight against illicit activities, including money laundering and terrorist financing.
The move comes in response to concerns raised by Senator Cynthia M. Lummis and Congressman J. French Hill in a letter to Attorney General Merrick Garland in October. They expressed apprehensions about the potential misuse of stablecoins. Tether’s response, encapsulated in two letters sent to the politicians, one in November and the other in December, outlines the company’s efforts in ensuring the responsible use of USDT.
Tether CEO Paolo Ardoino emphasized the company’s aspiration to be a “world-class partner” to the U.S., aiming to “expand dollar hegemony globally.” This statement reflects Tether’s alignment with broader U.S. interests in maintaining the dominance of the dollar in the global financial system.
In its latest correspondence, Tether detailed the implementation of a “wallet-freezing policy,” effective December 1, to aid law enforcement in curbing the malicious use of stablecoins. This policy, described as a “historic milestone,” involves freezing all wallets listed on the Office of Foreign Assets Control’s (OFAC) Specially Designated Nationals (SDN) list. Tether expressed pride in setting an industry precedent by expanding sanctions controls to the secondary market.
The company has strengthened its collaboration with various U.S. agencies, including recently onboarding the Secret Service onto its platform and working towards integrating the FBI. These steps are part of Tether‘s broader efforts to thwart malicious actors and assist in victim recovery.
Tether‘s commitment to preventing the illicit use of USDT extends to its robust know-your-customer (KYC) and anti-money laundering (AML) programs, comparable to those of sophisticated financial institutions. The company has undergone a Title 31 examination by the Internal Revenue Service (IRS) on behalf of the Financial Crimes Enforcement Network (FinCEN) and is registered as a Money Service Business with FinCEN.
In its extensive cooperation with global law enforcement agencies, Tether has worked with 19 jurisdictions worldwide, proactively offering information and assisting with ongoing investigations. The company has been instrumental in freezing 800 million USDT in secondary market addresses, mainly linked to hacks and thefts, and has supported the DOJ with numerous requests, freezing wallets holding significant amounts of USDT.
Tether’s collaboration with Israel’s anti-terrorist financing agency, the NBCTF, has been pivotal in identifying and freezing wallets linked to Hamas and other terrorist organizations. This partnership, predating the October attack, underscores Tether’s ongoing commitment to preventing the misuse of its stablecoin for illicit purposes.
