Tether, the issuer of the popular stablecoin USDT, has partnered with blockchain data platform Chainalysis to boost the security and transparency of its transactions. This collaboration aims to detect and prevent illicit activities, such as money laundering and terrorist financing, by leveraging advanced tools for monitoring and tracking transactions on the secondary markets where USDT is traded.

The partnership is part of Tether's ongoing efforts to improve its compliance measures in response to growing regulatory pressure worldwide. The new system developed by Chainalysis will enable Tether to monitor and analyze transactions on the secondary markets where USDT is traded, utilizing modern instruments for sanctions control and illicit transfer detection. This includes detecting potentially risky wallets and transactions that may be related to sanctions or money laundering.

Tether's efforts to enhance its transaction monitoring systems come amid growing pressure from regulators worldwide. There have been concerns that USDT could be used to bypass international sanctions and facilitate illicit financial activities. For instance, there have been allegations that USDT was used by Venezuela's state-owned oil company to skirt U.S. sanctions. Additionally, a UN report revealed that USDT is widely adopted in underground banking and money laundering in East Asia and Southeast Asia.

To address these challenges, Tether has chosen to be proactive in enhancing its compliance framework. Through the use of Chainalysis's technology, Tether aims to maintain the integrity of its platform by detecting and managing the risk of high-risk wallets and transactions ahead of time. The partnership provides a range of sophisticated tools to analyze the flow of USDT beyond basic market transactions, including Sanctions Monitoring and Illicit Transfers Detector features.

The Largest Wallet Analysis tool allows for the examination of the main USDT holders and their transaction patterns, helping to identify distribution and movement patterns of huge volumes of USDT. This feature is crucial for detecting anomalies and potential threats. The CEO of Tether, Paolo Ardoino, emphasized the importance of this collaboration as a crucial move towards transparency and absence in the cryptocurrency market.

Tether's proactive measures, including its partnership with 124 law enforcement agencies across 43 jurisdictions, demonstrate the company's commitment to strict compliance and monitoring standards. Additionally, Tether announced a significant improvement in its economic performance, with a net profit of $4.52 billion for the first quarter of 2024, attributed to the company's strong operations and targeted investments across various sectors, including AI, renewables, and blockchain technology.