Tether Implements Chainalysis Surveillance to Tackle Illicit Crypto Activities

Tether, the issuer of the stablecoin USDT, has entered into a partnership with blockchain data platform Chainalysis. This partnership is meant to strengthen the surveillance of transactions with Tether tokens, with special emphasis on the detection and diminishing of dangers that are related to illegal activities and sanctions violations.

This action is part of Tether’s consistent attempts to improve compliance measures in response to growing regulatory pressure in different countries.

The new system, which Chainalysis developed, will allow Tether to monitor, track, and analyze the transactions on the secondary markets where USDT is traded. Utilizing modern instruments for the control of sanctions and detection of illicit transfers, the initiative aims to detect potentially risky wallets and transactions that may be related to the sanctions list or associated with money laundering and terrorist financing.

Tether’s Regulatory Challenges and Oversight

Tether’s moves to improve its transaction monitoring systems have come during a time of growing pressure on the stablecoin operator from regulators worldwide. Issues have been raised regarding the possibility of using USDT to bypass international sanctions and cover different illicit financial activities. 

For example, there have been allegations that USDT was used by Venezuela’s state-owned oil company to skirt U.S. sanctions. In addition, a UN report released at the beginning of this year reveals that USDT is widely adopted in underground banking and money laundering throughout East Asia and Southeast Asia.

To these challenges, Tether has chosen to be proactive in enhancing its compliance framework. Through the use of Chainalysis’s technology, Tether seeks to maintain the suitability of the platform under its control, as such a system can be used to conduct illegal activities. Thus, Tether supports broader industry activities aimed at preserving the integrity of the cryptocurrency ecosystem.

Monitoring Tools and Their Functions

The partnership provides a range of sophisticated tools to analyze the flow of USDT beyond the basic market transactions managed by Tether. These tools comprise of Sanctions Monitoring and Illicit Transfers Detector characteristics. The former gives an extensive list of transactions connected to the sanctioned entities, while the latter helps in finding suspicious financial flows, particularly those that could be related to terrorist acts. Through this integration, Tether is seeking to detect and manage the risk of high-risk wallets and transactions ahead of time.

Another crucial part of the system is the Largest Wallet Analysis, which allows for the examination of the main USDT holders and their transaction patterns. Such analysis helps in finding the distribution and movement patterns of huge volumes of USDT, another feature that is important for the detection of anomalies and potential threats.

The CEO of Tether, Paolo Ardoino, emphasized the importance of this collaboration as a crucial move in the direction of absence and transparency of the cryptocurrency market. The proactive measures implemented by Tether, which includes the cooperative partnership with 124 law enforcement agencies across 43 jurisdictions today, demonstrate the company’s ambition to be the main depending on strict compliance and monitoring standards.

Meanwhile, Tether also announced a massive improvement in its economic performance, which is a net profit of 4.52 billion dollars for the 2024 first quarter. This success is attributed to the company’s strong operations and targeted investments across different sectors, such as AI, renewables, and blockchain technology.

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