USDT Issuer Collaborates with Monitoring Company to Prevent Illegal Activities
Tether, the issuer of the largest stablecoin in the world, USDT, announced on Thursday (5/2) evening local time in the United States (Friday in Taiwan time) that it will collaborate with blockchain data analytics and monitoring company, Chainalysis, to track the trading activities of USDT in the secondary market.
The term “secondary market activity” refers to the use of USDT for buying and selling within a broader ecosystem, but the trading parties are not the various transaction activities of Tether, the issuer of USDT.
In Chainalysis’ monitoring solution customized 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 the thorough categorization of USDT holders, including exchanges and the dark web.
3. Wallet Analysis: Chainalysis has developed the most comprehensive wallet analysis system currently available on the market, which will conduct in-depth research on key USDT holders and their activities.
4. Illicit Transfers Detector: Used to identify transactions related to illegal activities, such as terrorism financing.
Tether believes that Chainalysis’ solution will help Tether systematically monitor transactions, enhance understanding and supervision of the USDT market, and serve as an active source of intelligence for Tether’s compliance officers and investigators, helping them identify encrypted wallets with risks or those related to illegal and sanctioned addresses.
Paulo Ardoino, the CEO of Tether, stated in a press release, “This collaboration with Chainalysis establishes a critical 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 opinion, believing that the collaboration between the two parties will make the Tether ecosystem a safer trading environment.
Cryptocurrency transactions are publicly transparent, and if cooperation with law enforcement agencies is established, and accounts are frozen in real-time, this transparency becomes the most effective way to prevent criminal funds from being used for terrorism, fraud, and other illegal activities.
USDT currently has a circulating market capitalization of over $110 billion, far surpassing its closest competitor, USDC (market value of $33.9 billion), firmly holding the position of the world’s largest stablecoin. In the first-quarter profit report released last week, USDT achieved outstanding results with $4.52 billion.
However, in addition to general cryptocurrency users, even criminal groups are particularly fond of using 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 subject to US sanctions, has been found to continuously use USDT to evade US sanctions.
In October 2023, The Wall Street Journal reported that the Palestinian radical organization Hamas had raised nearly $41 million in funds using cryptocurrencies, including USDT.
The various connections with illegal activities have repeatedly subjected USDT and its issuer, Tether, to criticism. Even Cynthia Lummis, a Republican Senator who supports cryptocurrencies, wrote a letter to the Attorney General in October 2023, urging an investigation into Tether and accusing it of lacking financial transparency and “knowingly breaking the law,” assisting users in bypassing sanctions regulations, allowing sanctioned entities to conduct transactions through USDT.
Under increasing pressure from global regulatory agencies and policymakers, Tether has had to take action to address these accusations.
Apart from launching the monitoring system in collaboration with Chainalysis, Tether is currently cooperating with 43 jurisdictions and 124 law enforcement agencies worldwide to address the endless illegal activities.
Source: Coindesk, Cointelegraph, Tether
