Breaking! Venezuela Uses USDT to Circumvent US Oil Sanctions, Tether Issues Strong Statement: Will Block Payments and Freeze Assets

Tether, the world’s largest issuer of the USDT stablecoin, stated that following reports of the Venezuelan state oil company PDVSA using USDT to evade US sanctions and continue oil exports, the company will block payment processes and freeze addresses related to the sanctioned entities.

A Tether spokesperson emphasized that the company remains committed to stopping payments associated with entities sanctioned by the Office of Foreign Assets Control (OFAC). “Tether respects the OFAC SDN list and is dedicated to ensuring that sanctioned addresses are immediately frozen,” he said.

Previously, Reuters revealed that PDVSA has been using cryptocurrencies to facilitate its crude oil and fuel exports, as the country faces newly reimplemented US oil sanctions.

The report mentioned that due to Venezuela's failure to implement electoral reforms, the US Treasury Department demanded that PDVSA’s clients and suppliers cease transactions by May 31.

An anonymous source cited in the report stated that the reimposed sanctions would make it more challenging for Venezuela to increase its oil production and exports, as companies will need US authorization to conduct business with the South American nation.

The source also noted that PDVSA has shifted its oil sales to USDT as a mitigation measure to prevent the freezing of funds in foreign bank accounts as the new sanctions take effect.

A 2023 report linked cryptocurrency payments with a corruption scandal involving PDVSA, which uncovered $21 billion in oil export receivables that were not accounted for.

Reuters' source further stated that PDVSA has modified its spot oil trades to a contractual model for 2024, requiring prepayment in USDT for exports.

The report also indicated that the Venezuelan state oil company is asking new clients who wish to conduct oil trades to hold cryptocurrencies in their digital wallets.

It is understood that after obtaining a six-month license from the US in October 2023, companies wishing to resume business with PDVSA must resort to intermediary institutions to execute cryptocurrency payment requirements.

Tether's CEO Paolo Ardoino previously stated that adding new players in the stablecoin arena is crucial for enhancing legitimacy in the eyes of regulators.

“This means that USDT does not resist the emergence of new competitors. The recent move by Ripple to launch its own stablecoin could further increase the legitimacy of the stablecoin landscape,” he mentioned.

“First and foremost, competition is fierce. I have always believed that Tether will not be alone. The stablecoin ecosystem is an industry because there are many participants,” Ardoino said.

Stablecoins have become an increasingly important gear in the broader cryptocurrency field. As of April 2024, the total market value of stablecoins exceeds $130 billion, offering a wide range of practical functionalities from centralized exchanges to decentralized finance (DeFi) protocols.