Tether CEO Paolo Ardoino froze 326 wallets containing $435 million worth of Tether (USDT) for United States authorities including the Department of Justice (DOJ), the Federal Bureau of Investigation (FBI) and the Secret Service, all in the interest of becoming a "world class partner" with the establishment in Washington, D.C.
In a December 15 letter addressed to Sen. Cynthia M. Lummis (R-Wy.) and Congressman J. French Hill (R-Ar.), Tether revealed that it froze these assets to assist federal law enforcement authorities in pursuing the use of stablecoins like USDT for illegal activities such as money laundering and "terrorist" financing.
Tether wrote another letter before this as well, the two letters being a response to a letter Lummis and Hill wrote to Attorney General Merrick Garland on October 26 about the misuse of stablecoins.
The latest Tether letter explains that a new "wallet-freezing policy" was implemented on December 1 to help federal police battle the illicit use of stablecoins for purposes that undermine Deep State control over finance and other facets of life.
Calling the move a "historic milestone," Tether said the "straightforward yet impactful" policy involves freezing all wallets listed on the Office of Foreign Assets Control's (OFAC) Specially Designated Nationals (SDN) list.
"By expanding our sanctions controls to the secondary market, we are setting a precedent in the industry, leading with foresight and vigilance," the company said.
(Related: In late 2021, a class-action lawsuit was filed accusing Tether of engaging in "unlawful and deceptive" practices.)
Deep State won't go down without a fight
To ensure the new policy is a success, Tether is actually onboarding several federal law enforcement agencies, including the Secret Service and the FBI. Tether in the past also helped the DOJ "thwart bad actors and aid victims' recovery."
In its latest letter, Tether listed all the ways in which it aims to stop people from using USDT for illegal purposes, including by having a "strong" know-your-customer (KYC) and anti-money laundering (AML) program that is at least as good as those utilized by "sophisticated financial institutions."
On behalf of the Financial Crimes Enforcement Network (FinCEN), the Internal Revenue Service (IRS) conducted a Title 31 examination of Tether's KYC / AML program. Tether is registered as a Money Service Business with FinCEN.
Tether pays third-party companies like Chainalysis and WorldCheck to perform due diligence and background checks on all new potential customers. The company also uses Chainalysis and WorldCheck to fun continuous news and information checks on existing customers to keep their information up to date.
Most of Tether's thousands of customers are accredited individuals, trading firms and institutions, the company maintains. Compared to other companies that handle millions of customers, Tether with its mere thousands is able to perform "much more thorough due diligence," it insists.
Tether is right now also working with Chainalysis to secure a comprehensive independent analysis of USDT transactions across numerous major blockchains. There are also efforts afoot to expand Tether's real-time monitoring capabilities.
Specifically with regard to government agencies, Tether uses Chainalysis' Reactor Tool to monitor transactions and identify high-risk or suspicious activity, i.e., transactions involving mixers or sanctioned wallets.
All of this is of course aimed at keeping the establishment at the top of the food chain. The advent of decentralized cryptocurrencies poses a threat to fiat "funny money" like the U.S. dollar, which is one of the most subversive Ponzi schemes to ever exist.
Tether is also partnering with NBCTF, Israel's "anti-terrorist" financing agency, to identify and freeze wallets associated with Hamas and other organizations that Israel regards as "terrorist" organizations.
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