Tether Will Freeze Venezuelan Wallets Being Used to Evade US Sanctions
Tether has announced that all wallets associated with Venezuelas attempts to bypass U.S. sanctions on oil exports will be frozen.
The decision follows recent reports indicating an increased use of Tethers USDT by Venezuelas state-run oil company, PDVSA, to avoid sanctions imposed by the United States.
Venezuelas PDVSA Turns to Tether Amid Sanctions
According to a Reuters report, Venezuelas state-run oil company, PDVSA, transitioned to using Tethers USDT after facing renewed sanctions on its oil exports.
Tether took a similar stance in December last year, freezing 161 wallets in compliance with U.S. sanctions.
A spokesperson for the stablecoin issuer emphasized the companys commitment to upholding sanctions by stating, Tether respects the OFAC SDN list and is committed to working to ensure sanction addresses are frozen properly.
PDVSAs increased use of cryptocurrency payments is part of a broader strategy to mitigate the repercussions of U.S. sanctions re-imposed due to Venezuelas failure to implement electoral reforms.
By using cryptocurrencies like USDT, PDVSA can conduct transactions while minimizing the risk of assets being seized by U.S. authorities. Reuters notes that PDVSA uses intermediaries to hide the trail and evade tracking in USDT transactions.
However, a recent PDVSA scandal has complicated matters, as investigations uncovered around $21 billion in unexplained receivables from oil exports. This scandal is partly linked to prior transactions involving other cryptocurrencies, adding complexity to the situation.
USDT Prepayment for Oil Deals
In 2024, PDVSA restructured its spot oil deals to require prepayment for half of each cargos value in USDT. This requires new customers interested in buying Venezuelan oil to possess a digital wallet capable of conducting cryptocurrency transactions.
Furthermore, the U.S. government has conditionally permitted the resumption of business with PDVSA. This decision came in October when Washington issued a six-month license, allowing trading houses and former PDVSA customers to resume business with Venezuela. However, due to digital transaction requirements, many of these entities had to rely on intermediaries to facilitate the transactions.
Venezuelas venture into cryptocurrencies dates back to 2018, when it introduced the petro token to mitigate the economic turbulence induced by U.S. sanctions. However, the petros poor adoption led to its shelving earlier this year.
Meanwhile, OFAC has recently intensified its scrutiny of the cryptocurrency industry. In December, OFAC imposed fines on crypto exchange CoinList amounting to $1.2 million for facilitating Russian users in evading sanctions. Before this, the agency sanctioned a crypto mixer allegedly used by hackers in North Korea.
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