Tether will start monitoring the USDT secondary market to prevent illegal transactions

What’s new? Tether, the issuer of USDT, the largest USDT stablecoin with a capitalization of $110,7 billion, has begun working with the team of the analytics blockchain platform Chainalysis. This will allow the company to implement a customizable solution to monitor activity on the USDT secondary market. This refers to transactions taking place in the broader crypto market and is not related to the limited list of organizations that buy/redeem stablecoin directly through Tether.

Press release

What else is known? The solution developed by Chainalysis will allow Tether to monitor transactions and increase its control over the USDT market. Third parties will also be able to use it to identify wallets that may be linked to illegal activities.

The tool offers a full suite of monitoring and analysis tools, including a list of addresses and transactions associated with sanctions-listed individuals, as well as a categorization of USDT holders, including exchanges and darknet marketplaces. In addition, the tool is equipped with an illegal transfer detector that flags suspicious transactions.

Previously, Tether has been repeatedly accused of facilitating illegal transactions. The US Senate claimed that Tether was involved in raising funds for Hamas, while the United Nations called USDT one of the most popular money laundering tools in Southeast Asia.

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The new press release emphasizes that Tether is actively fighting illegal activity in the crypto sector, cooperating with 124 law enforcement agencies in 43 jurisdictions around the world and facilitating efficient data exchange. The company is already blocking all addresses on the US Treasury Department’s sanctions list.

Tether CEO Paolo Ardoino said the partnership with Chainalysis “marks a pivotal step in our ongoing commitment to establishing transparency and security within the cryptocurrency industry <...> reinforces our proactive approach to safeguarding our ecosystem against illicit activities.”

Chainalysis co-founder and Chief Strategy Officer Jonathan Levin emphasized that Tether's involvement in monitoring the USDT secondary market could transform the blockchain ecosystem and make it more secure: “Cryptocurrency is transparent, and harnessing that transparency to partner with law enforcement and freeze criminal funds is the best way to deter its use for terrorism, scams, and other illicit activity.”

Earlier, analysts at Kaiko reported that the share of USDT on centralized exchanges has fallen by 13% since the beginning of the year to 69% by the end of April. They attributed this to increased competition.