Blockchain analysis firm Chainalysis has developed a solution that will enable Tether, the stablecoin issuer, to monitor the secondary market for its digital currency. This new solution, consisting of multiple tools, will provide Tether with valuable market insights and the ability to identify wallets that may be linked to illicit or sanctioned activities.
The four tools included in the solution, as listed by Tether, are Sanctions Monitoring, Illicit Transfer Detector, Categorization, and Largest Wallet Analysis. Sanctions Monitoring will provide a comprehensive list of addresses and transactions involving sanctioned entities, while Illicit Transfer Detector will identify transactions potentially associated with terrorism financing. Categorization will classify Tether holders by type, such as exchange or darknet market participants, while Largest Wallet Analysis will focus on significant USDT holders and their activities.
Paolo Ardoino, the CEO of Tether, highlighted the company’s collaboration with authorities in 43 jurisdictions to combat illicit activities. However, Tether has faced criticism regarding its alleged involvement in criminal activities and terrorism financing.
Furthermore, Tether has attracted attention from United States Senator Cynthia Lummis, who called for an investigation into the role of Tether and Binance in the Hamas attacks on Israel. Lummis, along with Representative French Hill, accused Tether of knowingly facilitating violations of applicable sanctions laws.
In a report published by the United Nations Office on Drugs and Crime, crypto’s role in financing crime in East and Southeast Asia was heavily criticized, with a particular emphasis on USDT. Tether responded by stating that the report disregards the traceability of their stablecoin.
Tether has also faced scrutiny for its lack of financial transparency. With a market cap of $109.8 billion, USDT surpasses its closest competitor, USD Coin, which has a market cap of $33.9 billion.
The collapse of Mt. Gox, a major cryptocurrency exchange, played a significant role in the emergence of companies like Chainalysis that specialize in blockchain analysis.