Tether (USDT) Strengthens Financial Transparency and Law Enforcement Collaboration

Peter Zhang Sep 18, 2024 13:05

Tether (USDT) bolsters financial transparency and law enforcement collaboration, enhancing global financial inclusion and security.

Tether has established itself as a pioneer in the stablecoin market by prioritizing financial transparency, resilience, and collaboration with global law enforcement agencies. Over 350 million users worldwide benefit from Tether’s reliable and stable digital currency, which facilitates access to financial services, particularly in regions where traditional banking systems fall short.

Financial Transparency: Unmatched Clarity and Assurance

Tether’s transparency is a defining feature, reflected through its independent attestations conducted by BDO, a leading global independent accounting firm. The Q2 2024 attestation confirmed that Tether holds $118.4 billion in reserves, exceeding liabilities by $5.3 billion. Cantor Fitzgerald CEO Howard Lutnick has publicly praised Tether’s robust backing, stating, “They have the money,” underscoring confidence in Tether’s asset reserves.

Furthermore, Tether provides daily transparency reports, offering unparalleled insights into its reserves. This level of openness surpasses that of many traditional financial institutions, demonstrating Tether’s dedication to consumer protection and regulatory compliance.

Commitment to Law Enforcement and Combating Financial Crime

Tether is an industry leader in supporting law enforcement agencies globally. Recognizing its role as the biggest stablecoin in the world, Tether has taken proactive measures to establish direct communication lines with national police forces to assist in investigations and enact wallet freezes for criminal activities. Tether has hired ex-law enforcement officers, public prosecutors, bank investigators, and analysts from blockchain forensics firms to represent its External Investigations Unit.

Through robust compliance measures via partnerships with organizations like Chainalysis, and proactive illicit finance prevention through initiatives such as the T3 Financial Crime Unit, Tether has been instrumental in combating financial crime. Since its inception, Tether has collaborated with 180 agencies across 45 jurisdictions, freezing approximately 1,850 wallets involved in illicit activities and recovering over $113.8 million in assets.

Recently, Tether took decisive action against the notorious North Korean hacker group Lazarus, freezing and blacklisting wallet addresses linked to the group that contained nearly $5 million in stablecoins. In stark contrast to its closest competitor, Tether swiftly blocked these funds, protecting the integrity of the stablecoin ecosystem.

In notable cases, such as the U.S. Department of Justice’s disruption of a cyber scam organization, Tether’s swift action facilitated the seizure of nearly $9 million in crypto. The DOJ acknowledged Tether for its role in the seizure of the assets and would do so again and again. Additionally, Tether’s role in freezing $225 million linked to fraud schemes has been commended by authorities for its effectiveness in thwarting criminal networks.

Addressing Cryptocurrency Fraud

Contrary to common misconceptions, cryptocurrency-related fraud is not unique to stablecoins. According to a CipherTrace report and Nasdaq’s “Global Financial Crime Report,” most fraud originates outside the crypto ecosystem, primarily involving fiat currencies. Blockchain technology, including Tether, offers superior traceability compared to traditional financial systems, enabling authorities to track and seize assets tied to illicit activities.

To date, Tether has frozen $1.86 billion in assets connected to fraudulent transactions, reinforcing its commitment to preventing misuse of its stablecoin technology. By collaborating closely with law enforcement across multiple continents, Tether ensures that bad actors are held accountable while safeguarding its network for legitimate users.

Tether’s compliance program employs leading vendors like Refinitiv World Check, Chainalysis, and TRM Labs to monitor customer interactions and ensure adherence to Know-Your-Customer (KYC) and Anti-Money Laundering (AML) regulations.

Financial Inclusion and U.S. Dollar Dominance

Tether’s role extends beyond combating financial crime—it is a driver of global financial inclusion. In regions with unstable local currencies, Tether provides a stable alternative, allowing individuals to store and transfer value safely. This integration into the global economy empowers millions, offering them the opportunity to participate in international commerce.

Tether’s impact on the U.S. economy is significant. As the 18th largest holder of U.S. debt globally, with $97.6 billion in U.S. Treasuries, Tether strengthens the resilience of the U.S. financial system. By driving demand for USD through its USD₮/USD peg and offering customers access to digital dollars on the blockchain, Tether reinforces the U.S. dollar’s position as the dominant global reserve currency.

With over 350 million users worldwide, Tether provides unprecedented support for U.S. dollar hegemony. In regions such as Latin America and Asia, where access to USD is often limited, Tether’s stablecoin facilitates broader participation in dollar-based transactions, boosting local economic activity and further solidifying the dollar’s global dominance.

Resilience and Stability Amid Market Volatility

Tether’s ability to withstand market volatility has been proven time and again. During the crypto market crash triggered by Terra-LUNA’s UST depeg in May 2022, Tether redeemed $10 billion in USD₮ within a week—over 12% of its total circulation— and $20 billion in USD₮ in a month, without any disruption.

This was unprecedented as no bank in the world could process the withdrawal of even 12% of its outstanding liabilities within a week.

In fact, the size of USD₮ redemptions over those two weeks in May 2022 rivals the size of the largest banking withdrawals in history. This distinction is held by requests for $16.7 billion in withdrawals over 10 days from Washington Mutual which led to its collapse.

This is because, unlike banks, USD₮ is fully reserved.

All of the challenges that other protocols and banks face are only problems because they are not always fully reserved with high-quality liquid assets. If any given financial system doesn’t have enough collateral to back its outstanding liabilities, it faces the risk of collapse if it is hit with too many withdrawals or the collapse of the value of its available collateral.

By contrast, in its history, Tether has consistently fulfilled redemption requests without fail. Despite critics attempting to frame these redemptions as a weakness, they instead highlight Tether’s unparalleled liquidity and reliability.

A Commitment to Security and Financial Freedom

Tether has consistently proven its ability to balance security, transparency, and financial inclusion. Its collaboration with law enforcement, commitment to transparency, and proactive approach to compliance set the standard for the stablecoin industry. Tether is not just a stablecoin—it is the foundation of a new, global financial system that promotes both freedom and security for everyone.

As Tether continues to lead by example, it remains steadfast in its mission to democratize financial access through technology, ensuring a secure and inclusive financial future.

Image source: Shutterstock

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• usdt
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