The stablecoin provider Tether has declared that it will shut down wallets that use USDT to circumvent sanctions on Venezuela’s oil exports.
The move was prompted by Reuters’ story that PDVSA, the state-run oil corporation of Venezuela, was using more tether following the reimposition of sanctions on oil exports by the United States.
In December, the company frozen 41 wallets associated with the Specially Designated Nationals (SDN) list maintained by the Office of Foreign Assets Control (OFAC) of the U.S. Treasury Department. According to a Tether representative, “Tether respects the OFAC SDN list and is committed to working to ensure sanction addresses are frozen properly.”
PDVSA started using USDT last year, but since the United States decided to reimpose sanctions because of worries about Venezuela’s impending election, the company has been using it more frequently.
In 2018, Venezuela started experimenting with cryptocurrencies, creating the “petro” token in an effort to combat the country’s economic turmoil brought on by US sanctions. Due to poor uptake, the token was shelved earlier this year.
By using cryptocurrencies, PDVSA and its counterparties can avoid making transactions with cash that might be taken from foreign bank accounts by the United States. According to Reuters, PDVSA uses middlemen to impede the tracking of transactions while using tether.
OFAC is aware of the use of cryptocurrencies since it has tightened its regulations on the market in the last year. In December, it fined cryptocurrency exchange CoinList $1.2 million for helping Russian customers avoid sanctions after placing penalties on a cryptocurrency mixer that was reportedly utilised by North Korean hackers.
Tether blocked 32 cryptocurrency addresses connected to terrorism and conflict in Israel and the Ukraine in October of last year. But Tether stood up against freezing wallets connected to authorised coin mixing operator Tornado Cash a year ago.