The world’s largest stablecoin issuer has frozen 326 wallets containing $435 million worth of Tether (USDT) for U.S. authorities, the company said in a letter on Dec. 15. The assets were frozen to assist law enforcement agencies, including the U.S. Department of Justice (DOJ), the FBI (Federal Bureau of Investigation), and the Secret Service.
The letter, addressed to Senator Cynthia M. Lummis and Congressman J. French Hill, follows another letter sent to politicians on Nov. 16, both in response to an Oct. 26 letter from Lummis and Hill to Attorney General Merrick Garland outlining their concerns about the use of stablecoins for illegal activities such as money laundering and terrorism financing.
In releasing the two letters, Tether CEO Paolo Ardoino noted that the company’s goal is to become a “world-class partner” to the United States in order to “expand dollar hegemony around the world.”
Tether is committed to preventing illegal use of USDT
In its latest letter, Tether highlighted that it implemented a “wallet freezing policy” on Dec. 1 to assist law enforcement agencies in combating the illicit use of stablecoins. Tether called it a “historic milestone” and said that the “direct and impactful” policy involves freezing all wallets listed on the Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) list.
Tether noted:
“By extending sanctions controls to the secondary market, we are setting a precedent in the industry, leading with foresight and vigilance.”
Tether added that it recently onboarded the Secret Service to its platform and is currently working to bring the FBI onboard. The stablecoin issuer is also helping the Justice Department “deter bad actors and help rehabilitate victims.”
In a four-page letter from November, Tether laid out all of its ongoing efforts to prevent USDT from being used for malicious purposes. The letter said this included developing a “robust” know-your-customer (KYC) and anti-money laundering (AML) program that was comparable to that of a “sophisticated financial institution.”
Tether’s KYC/AML program has also been subject to a Title 31 review by the U.S. Internal Revenue Service (IRS) on behalf of the Financial Crimes Enforcement Network (FinCEN). Tether is registered with FinCEN as a money services business.
Tether said it works with third-party services such as Chainaanalysis and WorldCheck to perform due diligence and background checks on potential customers. The company also uses these services to conduct ongoing news and information checks on existing customers to ensure that the information is up to date, the letter said.
Tether stressed that its thousands of customers mainly include verified individuals, trading companies and institutions. Due to the limited number of customers, Tether conducts "more thorough due diligence" on all customers compared to the millions of customers handled by some cryptocurrency exchanges.
Additionally, the stablecoin issuer is working with Chainalysis to ensure comprehensive independent analysis of USDT transactions on major blockchains and explore more real-time monitoring capabilities.
Additionally, Tether said it uses Chainalysis’ Reactor Tool, which is used by multiple government agencies, to monitor transactions and identify high-risk or suspicious activity. For example, transactions involving mixers or sanctioned wallets are flagged as high risk.
Extensive cooperation with law enforcement agencies around the world
According to the November letter, Tether has cooperated with 19 jurisdictions around the world to assist with ongoing investigations, in some cases proactively providing information to law enforcement.
The letter stated that Tether had frozen 800 million USDT in secondary market addresses, which were mainly related to hacks and thefts. The company said it helped the Department of Justice satisfy 68 different requests by freezing 188 wallets holding 70 million USDT.
Tether is working with Israel's counter-terrorist financing agency, NBCTF, to identify and freeze wallets associated with Hamas and other terrorist organizations. Tether said its relationship with NBCTF began before the October attack and that it will continue to work with the agency to prevent the illegal use of USDT. #Tether #资产冻结
