Tether CEO Defends Record Against Senate Probe

TetherUSDT+0.12% CEO Responds to Senate Sanctions Probe

Tether is pushing back against a recent U.S. Senate report that accused the stablecoin issuer of facilitating illicit finance. The report claimed USDT served as a financial tool within Iran's shadow banking system.

Paolo Ardoino, the chief executive officer of Tether, defended his company on social media and at an industry event in Washington, D.C. He argued that government investigators ignored proactive compliance efforts undertaken by Tether.

Freezing Illicit Funds Ahead of Regulators

Ardoino shared specific figures to show that Tether acts rapidly when illegal activity occurs on its network.

According to Ardoino, Tether freezes suspicious wallet addresses an average of four weeks before official government agencies place them on sanction lists. These agencies include the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) and Israel's National Bureau for Counter Terror Financing (NBCTF).

In addition, Ardoino noted that 99% of the time, Tether blocks flagged wallets before private blockchain analytics firms like Chainalysis label them.

Senator Blumenthal's 'analysis' of Tether's sanctions report misses that, since 2023, Tether froze on average 4 weeks prior to OFAC & NBCTF official sanction designation and for 99% of the times Tether froze the reported addresses before Chainalysis labelled them.

Ardoino added that Tether's preventative measures directly contributed to a 94% decline in Iran-linked stablecoin transaction volume.

Frustration Over Media Leaks and Public Perception

Speaking remotely at D.C. Fintech Week, Ardoino expressed disappointment over how lawmakers released the investigation findings.

He criticized the subcommittee for sharing the report with media outlets before Tether had an opportunity to review the document. He stated that the public deserves to hear the company's full perspective.

The CEO explained that Tether aims to completely eliminate bad actors from USDT. However, he pointed out that when blocked, criminals often transition to unmonitored payment methods outside U.S. control.

Our aim is to push out the bad actors from USDT. Those bad actors are moving to other means that are outside of the control of the United States, and now outside of our control.

While acknowledging that compliance work is ongoing, Ardoino expressed confidence in Tether's overall direction and operational integrity.

What the Senate Report Alleged

The investigation was spearheaded by Senator Richard Blumenthal, the top Democrat on the Senate Permanent Subcommittee on Investigations. The report focused on illicit financing concerns surrounding digital assets.

Senate investigators concentrated heavily on historical data prior to 2024. They claimed Tether failed to freeze flagged wallets comprehensively during that earlier period.

The report asserted that this lack of early deterrence allowed groups like Hamas to shift away from BitcoinBTC+1.48% toward USDT for financing activities.

Political Ties and Future Regulatory Outlook

Following the report, Senator Blumenthal expanded inquiries into Tether's relationship with Cantor Fitzgerald, its U.S. financial custodian. Cantor Fitzgerald maintains close connections to former U.S. President Donald Trump's administration.

Furthermore, Tether recently named Bo Hines, a former White House crypto adviser during the Trump administration, as CEO of its U.S. division.

Political forecasts on prediction markets like Kalshi show shifting probabilities regarding Senate control. If Democrats secure a majority, committee leadership could grant Senator Blumenthal expanded authority to investigate cryptocurrency operations.

Broader Market Developments and Compliance

The defense by Tether coincides with significant market actions, including a recent $344 million USDT address freeze tied to U.S. enforcement against the Iranian regime.

Meanwhile, broader cryptocurrency market developments reflect ongoing changes across the industry:

• Bitcoin maintained price levels near $82,000 as stock markets recovered.
• JPMorgan announced plans to bring its JPM Coin deposit token to the EthereumETH+2.34% network.
• Total deposits in crypto vaults surpassed $10 billion amid increased regulatory oversight of lending risks.
• The U.S. CFTC challenged CME's legal positions in an ongoing dispute over perpetual futures.

When reviewing digital asset markets, past performance of digital assets or market participants does not guarantee future results. Readers should review market facts independently on Bitkub Market Data.