Tether enhances security by targeting OFAC-listed wallets

Tether announced a policy to freeze wallets associated with the OFAC SDN list to strengthen security and compliance efforts.

Tether, the company behind the famous stablecoin, has announced a major policy shift in its regulatory compliance and the way it works with law enforcement agencies. In a recent blog post published on December 9, Tether revealed its initiative to freeze wallets associated with individuals or entities on the U.S. Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) list.

The list includes individuals and companies controlled or owned by sanctioned countries, labeling them as entities with which U.S. individuals and companies are generally prohibited from doing business.

Tether ramps up efforts to crack down on crypto crime

Tether’s latest policy, effective from December 1, aims to strengthen the security infrastructure surrounding its stablecoin business. By implementing controls to freeze activities related to sanctioned individuals on the OFAC SDN List, Tether is stepping up its efforts to prevent illegal activities, such as the financing of terrorism and the unauthorized distribution of substances such as fentanyl. The move is in line with broader initiatives by the U.S. Treasury, which uses the SDN list to restrict cryptocurrency transactions that may be linked to criminal activity.

The voluntary wallet freeze policy is expected to enhance Tether’s security protocols, underscoring the company’s commitment to fostering a secure and compliant stablecoin ecosystem. Emphasizing the importance of this initiative, Paolo Ardoino, CEO of Tether, said, “By implementing a voluntary wallet address freeze for newly added addresses on the SDN list, as well as freezing previously added addresses, we will be able to further strengthen the active use of stablecoin technology and promote a more secure stablecoin ecosystem for all users.” ”

Take decisive action against sanctioned crypto addresses

This policy marks a significant shift in Tether’s approach to regulatory compliance. In August 2022, Tether announced that it would not actively freeze OFAC-sanctioned Tornado Cash addresses unless explicitly instructed by law enforcement. Tornado Cash is a decentralized cryptocurrency mixer, and since 2019, OFAC has been suspected of laundering more than $7 billion.

Tether’s decision to proactively freeze wallets on the SDN list is an important step that demonstrates the company’s changing stance on regulatory cooperation. This change comes against the backdrop of increased scrutiny of cryptocurrency companies by US regulators.

Despite the regulatory challenges, Tether’s market capitalization soared to $90 billion, accounting for nearly 70% of the stablecoin market. The surge in market capitalization highlights the strong demand for Tether, even in a regulatory-constrained environment.