Tether Will Freeze Venezuelan Wallets Being Used to Evade US Sanctions

Tether announced it would freeze all wallets associated with Venezuela’s attempts to circumvent US sanctions on oil exports.

The decision follows recent reports indicating that Venezuela’s national oil company PDVSA is increasing its use of Tether’s USDT to circumvent US sanctions.

Venezuela’s PDVSA on hold amid sanctions

Venezuela’s state oil company PDVSA has moved to using Tether’s USDT after facing new sanctions on oil exports, Reuters reports.

Tether took a similar stance last December, freezing 161 wallets in compliance with US sanctions.

“Tether respects the OFAC SDN list and will work to ensure sanctioned addresses are frozen appropriately,” a spokesperson for the stablecoin issuer said, emphasizing the company’s efforts to comply with sanctions.

PDVSA’s expanded use of crypto payments is part of a broader strategy to reduce the impact of reimposing US sanctions over Venezuela’s failure to reform its elections.

Using cryptocurrencies like USDT allows PDVSA to conduct transactions with minimal risk of asset seizure by US authorities. Reuters notes that PDVSA uses intermediaries to hide its trail and avoid tracing USDT transactions.

However, the recent PDVSA scandal has complicated matters after an investigation uncovered approximately $21 billion in unexplained debts from oil exports. This scandal is partially related to previous transactions involving other cryptocurrencies, further complicating the situation.

USDT prepayment for oil transactions

In 2024, PDVSA restructured spot oil trading, requiring half of the value of each cargo to be prepaid in USDT. For this reason, new customers interested in purchasing Venezuelan oil must own a digital wallet that allows them to perform cryptocurrency transactions.

Additionally, the U.S. government conditionally permitted the resumption of business with PDVSA. The decision came in October when the Washington government issued a six-month license allowing the trading company and PDVSA’s former clients to resume doing business with Venezuela. However, the requirements of digital trading have required many of these companies to rely on intermediaries to facilitate transactions.

Venezuela’s efforts in cryptocurrencies date back to 2018, when it introduced the ‘Petro’ token to ease the economic turmoil caused by US sanctions. However, the plan was shelved earlier this year after the Petro’s implementation did not go well.

Meanwhile, OFAC has recently increased its oversight of the cryptocurrency industry. In December, OFAC fined cryptocurrency exchange CoinList $1.2 million for helping Russian users evade sanctions. Earlier, authorities had sanctioned a cryptocurrency mixer allegedly used by North Korean hackers.

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