Amid Rising Global Tensions, Tether Cracks Down on Stablecoin Terrorist Financing
By Noah Washington October 18, 2023
- Tether froze over $873,000 in USDT linked to suspected terrorist financing in Ukraine and Israel, working with law enforcement agencies
- This freezing of funds is part of Tether's broader efforts against illicit cryptocurrency use, having frozen an estimated $835 million in assets to date
- Tether emphasizes its commitment to transparency and tracing cryptocurrency transactions, contrary to the common perception they are anonymous
Tether, a leading stablecoin issuer, has taken a major step in the fight against illicit financial activities, freezing $873,118 worth of USDT suspected to be linked to terrorist activities in Ukraine and Israel. Tether worked closely with local law enforcement agencies to execute the operation.
This significant action highlights the industry's determination to prevent its platforms from being used for illegal activities, and marks a crucial step in the ongoing efforts to maintain the integrity of the global financial system.
Collaborates with International Law Enforcement
The operation was executed in collaboration with Israel's National Bureau for Counter-Terror Financing, highlighting the global reach of cryptocurrency and the necessity for international cooperation in tackling illicit activities.
Paolo Ardoino, who assumed the role of Tether's CEO in October after years as CTO, stated "Cryptocurrency is a powerful tool, but it is not a tool for crime".
"Tether remains committed to promoting responsible blockchain technology use and standing as a robust defense against cybercrime," said Ardoino in a public statement. This transparency allows Tether to contribute significantly to the fight against the misuse of USDT in funding criminal and terrorist activities.
Ardoino also emphasized Tether's active engagement with law enforcement agencies worldwide, the aim identifying and freezing assets associated with criminal and terrorist activities. This ongoing collaboration demonstrates Tether's commitment to the responsible use of blockchain technology and its dedication to ensuring the security and financial integrity of global financial systems.
Background of Asset Freezing Efforts
Tether's action to freeze $873,118 worth of USDT is not an isolated incident but part of a broader effort. In late 2022, the company froze over $360 million in assets and subsequently reissued over $100 million of USDT that had been intercepted.
While Tether touts its freezing of funds as an act against terrorism and illegal activity, critics argue it grants the company too much unchecked power. There are concerns users could have their assets frozen by mistake or that Tether is overreaching in its judgments. Some argue these actions go against the ethos of cryptocurrency and erode financial privacy and freedom.
Crypto community members voicing opinions. Source: X/Twitter
Such decisive actions may ultimately legitimize Tether and stablecoins in the eyes of wary governments and financial institutions. Among the public, responses have been mixed - some praising the targeting of potential terrorist funds, while others express renewed skepticism about cryptocurrencies being anonymous and uncontrolled.
This relentless pursuit of security has culminated in Tether estimating that it has frozen a total of $835 million in USDT, primarily linked to blockchain and cryptocurrency exchange hacks. The stablecoin issuer has also stated that it has partnered with multiple countries worldwide to address illicit cyber activity involving its dollar-backed stablecoin.
Crypto Freedom, Centralized Control
The 32 addresses frozen by Tether collectively held $873,118 worth of USDT. Tether's action restricts the "send USDT" function for these wallets, effectively preventing the owners from transferring the funds until the freeze is lifted. This measure is essential in preventing the immediate use of these assets for illicit purposes.
The act of closing cryptocurrency wallets runs contrary to the fundamental ethos of Bitcoin and other decentralized cryptocurrencies. Bitcoin was designed to provide financial freedom and autonomy to its users, allowing them to have full control over their funds without the need for intermediaries or central authorities.
This incident serves as a reminder of the potential challenges that could arise with the introduction of Central Bank Digital Currencies (CBDCs). These are centralized digital currencies and could potentially grant governments the power to control and freeze individual wallets, raising concerns about the erosion of financial privacy and individual autonomy.
Commitment to Security and Integrity
Tether has reaffirmed its unwavering commitment to upholding the highest standards of security and integrity in the cryptocurrency sphere.
Tether's market capitalization over the past year. Source: CoinGecko
Tether's recent decision to freeze $873,118 worth of USDT, linked to suspected terrorist activities in Ukraine and Israel, underscores the industry's unyielding commitment to combating illicit financial operations.
By embracing traceability, transparency, and international cooperation, Tether sets a benchmark for responsible blockchain technology use, demonstrating the potential for cryptocurrencies to be a force for good in the global financial landscape.