Tether integrates anti-money laundering tool from Chainalysis

The scandal-ridden Stable Coin Tether forces confidence-building measures. A compliance tool from Chainalysis is to provide more transparency. Will Tether be able to counteract the accusations around him and the sister company Bitfinex?

Tether has taken steps to make its own stable coin (USDT) unattractive for money laundering. For this purpose, it acquired a compliance solution from Chainalysis. Its Know Your Transaction (KYT) tool has been used by Tether since February 12.

Chainalysis announced the launch of the anti-money laundering program in a press release. Know Your Transaction allows real-time control of the entire life cycle of a token, from issuance to redemption. The team behind the largest stable coin in terms of turnover is thus given the opportunity to overview its own block chain as a whole and search for suspicious activities. Chainalysis co-founder Jonathan Levin commented on this as follows:

“By introducing appropriate AML [anti-money laundering] monitoring of transactions, Tether is demonstrating its commitment to transparency and regulatory compliance, further building the trust of a growing user community.“


Transparency without the disclosure of personal information

The Know Your Transaction tool also allows the creation of individual risk profiles for each token owner. Nevertheless, the tool is designed to ensure compliance with government anti-money laundering regulations without disclosing users’ personal data. At least this is what Paolo Ardoino, Chief Technology Officer at Tether, emphasized:

“As one of the largest crypto currencies in terms of market capitalization, we have a responsibility not only to regulators but also to the crypto-currency ecosystem to have transparent, automated compliance solutions in place to handle any volume at any time. This solution enables us to ensure a secure compliance program that fosters trust from regulators, law enforcement and users.  This is achieved without sharing our users’ identity data, as this data is only stored on our servers”.


Meanwhile, the speculation and allegations surrounding Tether and the Bitfinex crypto exchange continue. Both companies have the same ownership structure. They are repeatedly accused of deliberately manipulating the Bitcoin price. At the moment they even have to answer to a US court for this.

At the heart of these accusations is the suspicion that the Tether Stable Coin is not fully covered by US dollars and other deposits as promised. An audit by every trick in the book has yet to be carried out. Instead, Tether and Bitfinex would have printed uncovered USDT tokens to buy Bitcoin and drive the price up. The economists John Griffin and Amin Shams want to have proven this in a study. They even imply that the two companies are significantly involved in the enormous rise in Bitcoin’s price at the end of 2017.

Tether and Bitfinex have repeatedly distanced themselves from these accusations. They have also firmly rejected the truth of the study just mentioned. Nevertheless, it is reasonable to assume that Tether is investing not least in compliance measures to counteract growing mistrust.