​Tether CTO says all customers are being tracked for sanctions violations

What’s new? Paolo Ardoino, Chief Technology Officer of Tether (the issuer of the USDT stablecoin), responded to criticism of the company by former SEC attorney John Reed Stark. The former SEC official questioned its trustworthiness, to which Ardoino said that the team monitors all customers for sanctions violations. He added that customers’ transfers are being monitored by Chainalysis, an analytics service, for links to potentially high-risk wallets.

Mr Stark:1. Tether is not a U.S. company and does not operate in the U.S., nor solicit U.S users. Our core markets are the unbanked people in emerging markets and developing countries, billions of people left out from the financial system just because they're too poor to be of… — Paolo Ardoino 🍐 (@paoloardoino) May 11, 2023

What else did CTO say? Ardoino stressed that Tether is not a US company, does not operate in the United States, and does not attract users from that country. According to him, the company works with people who do not have bank accounts “in emerging markets and developing countries, billions of people left out from the financial system just because they're too poor to be of interest of the banking industry.”

He said that Tether not only verifies all primary market customers, but also conducts enhanced due diligence on the ultimate beneficial owner (UBO), directors, and signatories. In addition, all clients are risk rated, which is consistent with bank-level AML programs.

Ardoino noted that Tether’s compliance team helps secondary market users who have sent funds to contract wallets or addresses linked to illegal activity get their assets back.

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According to CTO, the company has blocked hundreds of millions of dollars in USDT by working with law enforcement agencies around the world. Ardoino said that Tether’s response time and diligence in cooperating with law enforcement and regulators are more effective than any bank in the world, due to the transparency of blockchain technology and a desire to protect users and the company.

In addition, Tether has cooperated with law enforcement agencies around the world in more than 200 cases, including several cases with US agencies. In particular, the company regularly cooperates with the FBI and DOJ. Tether has already recovered more than $100 million from hacked individuals, exchanges, and networks. The issuer also annually participates in the Virtual Currencies Conference organized by Europol.

Ardoino recalled that Tether is registered with the Financial Crimes Enforcement Agency (FinCEN) within the US Treasury Department, regularly files suspicious activity reports, and is subject to agency inspections.

CTO believes that Tether “is doing a fine job to protect its users, taking risk management extremely seriously, accruing additional reserves (excess equity) on top of its 100% reserves.” According to Ardoino, the issuer is performing better than traditional banks.

On May 10, Tether released its Q1 financial report, reporting a net profit of $1,48 billion. The company had $2,44 billion in excess reserves. The report was prepared by the Italian division of BDO, one of the leading accounting firms.