Tether Pledges to Halt Asset Movement as Venezuela Explores Cryptocurrency to Circumvent Oil Sanctions

The issuer of USDT, Tether, has announced that it will freeze addresses associated with sanctioned entities in response to a report revealing that Venezuela’s state-run oil company, PDVSA, was using the stablecoin to bypass sanctions. Tether spokesperson confirmed that the company is committed to preventing payments linked to Office of Foreign Assets Control (OFAC) sanctioned entities. This follows an exclusive report from Reuters which claimed that PDVSA has been using cryptocurrencies to facilitate its crude oil and fuel exports, as the country faces new oil sanctions imposed by the United States. The report states that the US Treasury Department has mandated PDVSA customers and providers to wind down transactions by May 31 due to Venezuela’s failure to implement electoral reforms. Anonymous sources cited in the report suggest that PDVSA has turned to Tether (USDT) to move its oil sales as a way to avoid having funds frozen in foreign bank accounts under the new sanctions. In 2023, cryptocurrency payments were linked to a corruption scandal at PDVSA where $21 billion of unaccounted receivables for oil exports were discovered. The report also reveals that PDVSA has shifted its spot oil deals to a contract model in 2024, requiring prepayment for exported cargo in USDT, and new customers are required to hold cryptocurrency in a digital wallet for oil transactions. Companies that sought to resume business with PDVSA following a six-month licensing approval from the US in October 2023 had to rely on intermediaries to carry out the cryptocurrency payment requirements.