Ukraine fears use of Stablecoin for capital flights, calls on Tether to stop Russian transactions

Ukraine’s digital transformation minister Mykhailo Fedorov has called on Tether to stop doing business with Russian citizens in a Twitter message to Tetheri Paolo Ardoino, senior director of the stablecoin operator. This includes a request to block access to Russian goods and services for companies such as Apple, Intel, SAP SE and cryptocurrency exchanges. Tether, in response, has decided to reject the request, as well as popular cryptocurrencies such as Kraken and Coinbase, which have cited censorship as one of the problems facing cryptocurrencies.

Although Tether’s response did not come as a direct response to the Ukrainian minister’s tweet, in a statement to CoinDesk, stablecoin said: “Tether is constantly monitoring the market to ensure that there are no irregular movements or measures against international sanctions … “

Since the Russian invasion last month, the Ukrainian government has stepped up pressure on companies to cease operations in Russia. Goldman Sachs companies have taken steps to get out of the country from PayPal, although the response from most cryptocurrency-related companies has been more reserved.

A Bloomberg report pointed out that Fedorov’s tweet specifically suggested that Tether could be used by Russian USDT oligarchs to move money across borders. Tether has been widely used in the past as a global tool for capital flight, the report says it has eventually been used to convert to other cryptocurrencies, such as Bitcoin. Citing data provided by Kaiko data analytics company, the report also shows that a large part of the trading volume of ruble-called cryptocurrencies appears to be done using Tether.

For starters, Tether is a private company that issues a stable amount of money that backs up U.S. dollar reserves. In April 2019, the New York Attorney General filed a civil lawsuit against Tether for allegedly lying about its reliable currency reserves and confusing corporate and client funds. Tether then resolved the case in February 2021 without admitting or denying any wrongdoing.

Cryptocurrency is a non-regulated digital currency, not a legal tender and subject to market risks. The information provided in this article is not intended to be financial advice, commercial advice or any kind of advice or recommendation offered or accepted by NDTV. NDTV shall not be liable for any losses arising from investments based on any recommendations, forecasts or other information contained in this article.

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