News & Analyses

Tether moves against Venezuelan government’s plans to leverage USDT for oil transactions

  • Tether to freeze all wallet addresses linked to the Venezuelan government’s oil sales that bypass sanctions.
  • The Venezuelan government has been practicing oil sales using Tether for almost six months.
  • An X user hints at the Venezuelan government using DAI stablecoin to perform oil transactions.

USDT issuer Tether said on Tuesday that it will freeze all wallet addresses linked to the Venezuelan government’s oil sales bypass. The company made this statement after it learned about Venezuela’s efforts to continue selling oil outside of the US government’s sanctions using the USDT stablecoin.

Tether to freeze addresses related to OFAC-sanctioned entities

In a recent report by Cointelegraph, one of Tether’s spokespersons said the company does not support payments linked to entities sanctioned by the Office of Foreign Assets Control (OFAC)-. He said that “Tether respects the OFAC SDN list and is committed to working to ensure sanction addresses are frozen promptly.”

This also follows reports that entities engaging in such trades with the country’s state-run oil company, PDVSA, had to use intermediary wallets to perform the transactions.

These reports came after the discovery that the Venezuelan government’s state-run oil company, PDVSA, had been using stablecoin to carry out its fuel and crude oil deals for nearly six months before the US government approved its licensing in 2023.

Also read: Cryptocurrency as sanction evasion appears limited, but that could change in the future – ING

One report from 2023 links the corruption scandal in the PDVSA to cryptocurrencies after $20 billion of funds in crude oil shipments seemingly disappeared.

Unknown sources claimed that the PDVSA has decided to export crude oil and sell raw materials through USDT stablecoin to avoid having their foreign accounts frozen after the United States reimposed sanctions.

As the news of Tether’s move against Venezuela storms the internet, X (formerly Twitter) users have expressed their displeasure over the matter, highlighting that the company’s actions may be biased.

One X user hinted that the Venezuelan government is using DAI, a decentralized stablecoin, to perform its oil transactions, considering it isn’t controlled by a central entity like USDT.

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