Tether Freezes Venezuelan Addresses Tied to Sanctioned Entities, Including PDVSA

Following reports that Venezuela's state-owned oil company PDVSA is using Tether's (USDT) stablecoin to circumvent U.S. sanctions, Tether has announced plans to freeze addresses linked to sanctioned entities. Tether's commitment to adhering to the Office of Foreign Assets Control (OFAC) sanctions list ensures prompt freezing of sanctioned addresses.

Tether Freezes Addresses Linked to Sanctioned Entities, Including Venezuela's PDVSA

amidst a recent report alleging that Venezuela's state-owned oil company, PDVSA, has been utilizing Tether's USDT stablecoin to circumvent sanctions.

Tether's Commitment to Compliance

A spokesperson from Tether, the issuer of USDT, affirmed the company's unwavering adherence to compliance with sanctions imposed by the Office of Foreign Assets Control (OFAC). The statement emphasized, "Tether fully respects the OFAC SDN list and remains dedicated to ensuring the prompt freezing of sanctioned addresses."

Reuters Report on PDVSA's Crypto Operations

The genesis of Tether's actions lies in an exclusive report by Reuters, which unveiled that PDVSA has been leveraging cryptocurrencies to facilitate its crude oil and fuel exports. The move comes as the United States has reimposed oil sanctions on Venezuela, hindering the nation's ability to trade freely in international markets.

According to the Reuters report, the U.S. Treasury Department has mandated that PDVSA's customers and suppliers cease all transactions by May 31, 2024, due to Venezuela's failure to implement electoral reforms.

Tether's Role in PDVSA's Mitigation Strategy

Anonymous sources familiar with the matter disclosed that the reimposed sanctions will pose significant challenges for Venezuela to ramp up its oil production and exports. Companies seeking to engage in business with the South American nation will now require explicit authorizations from U.S. authorities.

To circumvent these restrictions, Reuters reported that PDVSA has shifted its oil sales to Tether (USDT) as a protective measure against funds being frozen in foreign bank accounts. This strategy aligns with earlier reports in 2023, which linked cryptocurrency payments to a corruption scandal at PDVSA involving unaccounted receivables for oil exports amounting to $21 billion.

PDVSA's Updated Payment Model and Customer Requirements

Reuters sources further asserted that PDVSA has restructured its spot oil deals in 2024 to a contract model that mandates prepayment for exported cargo in USDT. Moreover, the Venezuelan state-run oil company reportedly requires new customers engaging in oil transactions to hold cryptocurrency in a digital wallet.

Companies seeking to resume business with PDVSA following a six-month licensing approval granted by the U.S. in October 2023 reportedly resorted to intermediaries to fulfill the cryptocurrency payment requirements.

Conclusion

Tether's decisive action to freeze addresses linked to sanctioned entities underscores its commitment to regulatory compliance and its determination to prevent its services from being used for illicit activities. The ongoing developments surrounding PDVSA's alleged use of cryptocurrencies to evade sanctions highlight the evolving role of digital assets in the face of international sanctions and the need for continued vigilance in the cryptocurrency industry.