- Tether has addressed concerns about the illicit use of USDT stablecoin by revealing communications sent to US lawmakers
- In the letters, Tether said it is taking proactive measures to alleviate fears over the use of USDT by terrorist groups
- Tether pointed out its work with the FBI and other agencies, and its asset-freezing activities
Tether has taken a proactive step in addressing concerns over the illicit use of its USDT stablecoin by revealing communications sent to US lawmakers in response to requests for intervention by the Department of Justice (DOJ). These letters, dispatched in recent weeks to members of the US Senate Committee on Banking, Housing, and Urban Affairs and the US House Financial Services Committee, aim to shed light on Tether’s “commitment to fighting illicit use of stablecoins.” The company has come under pressure over the use of the USDT token by terrorist groups and is clearly doing all it can to allay those fears.
Lawmakers’ Accusations Prompt Response
The genesis of these communications lies in the requests made by Senator Cynthia Lummis and Representative French Hill in October. The pair urged the DOJ to scrutinize the extent to which both Binance and Tether might be providing material support and resources for terrorism, with their concerns prompted by a coordinated attack by Hamas against Israel on Oct. 7. The lawmakers suggested that the attack might have been financially supported, in part, by illicit crypto transactions involving Tether, Binance, and others.
In its responses, Tether emphasized its dedication to compliance, highlighting its Know Your Customer (KYC) program, transaction monitoring system, and proactive approach to identifying suspicious accounts and activities, adding that it has “always assisted law enforcement when called upon to act, and we remain fully committed to continuing to work proactively with agencies globally.”
The company added that it “has and will assist in identifying and freezing addresses subject to sanctions, engaged in illicit activity, or engaged in any form of terrorist financing,” and added that its monitoring of clients extends beyond onboarding and includes continuous surveillance through tools like Chainalysis’ Reactor and secondary market risk reports.
Tether Reveals FBI Collaboration
In further support of its claims, Tether disclosed its collaboration with the Federal Bureau of Investigation (FBI) as part of its efforts to strengthen ties with law enforcement, nothing, “These strategic relationships reinforce our commitment to supporting law enforcement in combating nefarious activities and contributing to the recovery of victims’ funds.”
Just ten days ago, Tether announced that it had initiated a voluntary wallet-freezing policy, introducing secondary market controls to freeze activities associated with sanctioned persons on the United States Office of Foreign Assets Control Specially Designated Nationals List.
This marks a significant shift for Tether given that in 2022 it refused to proactively freeze wallets associated with irregular activities. However, the intensified regulatory scrutiny on crypto firms, both in the US and worldwide, has evidently prompted the company to reassess its strategy and take a more proactive approach to address concerns and cooperate with authorities.
