Tether, the entity behind the stablecoin Tether, has revealed that it communicated with U.S. lawmakers regarding a request from the Department of Justice to intervene against the illegal utilization of its stablecoin. The correspondence, dispatched to members of the U.S. Senate Banking, Housing and Urban Affairs Committee, and the U.S. House Financial Services Committee on November 16 and December 15, outlines "Tether's dedication to combating the unlawful use of stablecoins."
These letters were in response to appeals made in October by Sen. Cynthia Lummis and Rep. French Hill, urging the Justice Department to thoroughly assess the involvement of Binance and Tether in supporting terrorism. This request aimed to evaluate the extent to which these entities provide material support and resources. The lawmakers' concerns stemmed from the October 7 coordinated attack by Hamas on Israel, partially attributing it to illegal cryptocurrency trading, which allegedly facilitated substantial terrorist financing.
In addressing these concerns, Tether asserted its implementation of a know-your-customer (KYC) program, transaction monitoring systems, and a proactive approach to identifying suspicious accounts and activities. Emphasizing its cooperation with law enforcement agencies, Tether highlighted its commitment to actively collaborate with global institutions. The company affirmed its willingness to assist in identifying and freezing addresses linked to sanctions, illegal activities, or any form of terrorist financing. Moreover, Tether emphasized its continuous monitoring of customer activity beyond the onboarding process, utilizing monitoring tools such as Chainalysis's Reactor and receiving secondary market risk reports.
In a related development, Tether announced on December 9 the initiation of a voluntary wallet freeze policy, aiming to implement controls in the secondary market to freeze activities linked to individuals listed under the U.S. Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) list. This move contrasts with Tether's earlier stance in 2022, where it declined to proactively freeze wallets associated with unusual activity. The intensified regulatory actions against cryptocurrency firms worldwide led Tether to reconsider its strategy.
Tether's CEO, Paolo Ardoino, stated, "Tether aims to be a reputable partner to the United States as we continue to aid law enforcement efforts and promote the dominance of the U.S. dollar worldwide." The increased scrutiny of U.S. cryptocurrency companies in 2023 has affected USDT's market share, which presently stands at $90 billion according to CoinMarketCap.
