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USDT move by Venezuela’s PDVSA triggers freezing threats from Tether

By:
on Apr 23, 2024
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  • Venezuela's PDVSA seeks to bypass US sanctions by using USDT stablecoin.
  • PDVSA's move has prompted Tether to vow freezing addresses linked to sanctioned entities.
  • Tether has pledged compliance with OFAC sanctions.

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Venezuela’s state-run oil company, PDVSA, has been hit with a harsh response from Tether, the issuer of the USDT stablecoin.

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Amidst efforts to bypass oil sanctions imposed by the United States, PDVSA reportedly turned to crypto, particularly USDT, to facilitate its crude oil and fuel exports.

Tether’s response to PDVSA’s crypto move

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Tether, in response to the reports of PDVSA’s intentions to use USDT to navigate around the sanctions, has vowed to freeze assets linked to sanctioned entities.

Venezuela, facing renewed oil sanctions from the U.S., is seeking alternative routes to sustain its oil exports amidst tightening restrictions.

The U.S. Treasury Department’s requirement for PDVSA’s customers and providers to conclude transactions by May 31 has spurred the state-run oil company to explore unconventional payment methods. According to Reuters, PDVSA’s recent shift to cryptocurrency payments is seen as a strategic manoeuvre to sidestep the impending sanctions.

Reports claim that PDVSA has been moving its oil sales to Tether in an attempt to prevent funds from being frozen in foreign bank accounts as the sanctions take effect.

It is not the first time that PDVSA is being linked to crypto payments. In 2023, reports linked crypto payments to a corruption scandal at PDVSA that involved $21 billion of unaccounted oil export receivables.

Tether complying with regulatory standards

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Tether’s action aligns with its commitment to compliance with regulatory standards. The company, recognizing the importance of adhering to the Office of Foreign Assets Control (OFAC) sanctions, has pledged to promptly freeze addresses associated with sanctioned entities.

In a statement to a leading media outlet, a Tether spokesperson emphasized the company’s respect for the OFAC SDN list and its determination to prevent payments linked to sanctioned entities. The proactive stance underscores Tether’s role in upholding international regulations and preventing the misuse of its stablecoin for illicit purposes.

The clash between PDVSA’s efforts to evade sanctions through cryptocurrency and Tether’s resolve to uphold regulatory compliance highlights the complex interplay between technology, finance, and geopolitics.

As Venezuela seeks avenues to circumvent sanctions, Tether’s response underscores the challenges posed by the intersection of traditional regulatory frameworks and emerging digital currencies.

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