USDT Issuer Collaborates with Monitoring Company to Prevent Illegal Activities
Tether, the issuer of the largest stablecoin, USDT, announced last Thursday that it will be partnering with blockchain data analytics and monitoring company, Chainalysis, to track the trading activities of USDT in the secondary market.
The secondary market refers to the use of USDT for buying and selling within a broader ecosystem, excluding the various transaction activities of Tether, the issuer.
In Chainalysis’ tailored monitoring solution for Tether, there are four main components:
1. Sanctions Monitoring: Provides a detailed list of wallet addresses and transaction activities of entities subject to international sanctions.
2. Categorization: Enables thorough classification of USDT holders, including exchanges and the dark web.
3. Wallet Analysis: Chainalysis has developed the most comprehensive wallet analysis system currently available, which delves deep into the activities of key USDT holders.
4. Illicit Transfers Detector: Used to identify transactions related to illegal activities, such as terrorism funding.
Tether believes that Chainalysis’ solution will help them enhance their systematic monitoring of transactions, strengthen their understanding and supervisory capabilities in the USDT market, and serve as a proactive source of intelligence for Tether’s compliance officers and investigators, assisting them in identifying high-risk encrypted wallets associated with illegal and sanctioned addresses.
Paolo Ardoino, the CEO of Tether, stated in a press release, “This collaboration with Chainalysis establishes a key step in our commitment to enhancing transparency and security in the cryptocurrency industry. We will continue to uphold our integrity standards and strengthen our proactive actions against criminal activities.”
Jonathan Levin, co-founder and Chief Strategy Officer of Chainalysis, also expressed his views, stating that the collaboration between the two parties will make the Tether ecosystem a safer trading environment.
Cryptocurrency transactions are publicly transparent, and the most effective way to prevent criminal funds from being used for terrorism, fraud, and other illegal activities is through collaboration with law enforcement agencies and the immediate freezing of accounts.
Currently, USDT has a circulating market value of over $110 billion, far surpassing its closest competitor, USDC, with a market value of $33.9 billion, making it the world’s largest stablecoin. In its first-quarter earnings report last week, Tether reported an impressive $4.52 billion in profits.
However, not only regular cryptocurrency users, but even criminal organizations have a strong affinity for USDT. In January of this year, the United Nations Office on Drugs and Crime released a report stating that USDT has become the primary payment tool for money laundering and fraudulent activities in East Asia and Southeast Asia. Additionally, the Venezuelan state-owned oil company, which is under US sanctions, has been found to be using USDT to evade these sanctions.
In October 2023, The Wall Street Journal reported that the Palestinian extremist group Hamas raised nearly $41 million through the use of cryptocurrencies, including USDT.
The association of USDT and its issuer, Tether, with illegal activities has led to frequent criticism. In October 2023, even Cynthia Lummis, a Republican senator who supports cryptocurrencies, wrote to the Attorney General urging an investigation into Tether, accusing the company of lacking financial transparency and assisting users in circumventing sanctions, enabling sanctioned entities to conduct transactions through USDT.
Under increasing pressure from global regulatory bodies and policymakers, Tether has had to take action to address these allegations. Apart from launching the monitoring system in collaboration with Chainalysis, Tether is currently working with 43 jurisdictions globally and 124 law enforcement agencies to combat the relentless surge of illegal activities.
Sources:
Coindesk, Cointelegraph, Tether