On Thursday, Tether, the company behind the world's most widely used stablecoin, announced that it had frozen approximately $344 million worth of USDT tokens across two Tron blockchain wallets. This move was made in response to requests from US authorities, who had flagged the wallets for suspected connections to illicit activities. As a result, further movement of the funds was prevented.
Although the nature of the activities and the identities of the wallet holders were not disclosed, blockchain analytics firm AMLbot reported that the addresses had appeared in scam-related documents and posts. This development comes at a time when the role of stablecoin issuers in preventing the transfer of funds linked to illicit activities is under scrutiny. The Financial Action Task Force has recently warned that stablecoins are increasingly being used for illicit transactions, including the evasion of sanctions and money laundering.
Public blockchains enable the tracing of transactions, while issuers have the ability to freeze assets under specific conditions. This issue gained attention earlier this month after the $285 million exploit of Drift Protocol, in which attackers transferred hundreds of millions of USDC stablecoins and bridged funds across chains.
Critics argued that Circle, the issuer of USDC, could have acted more swiftly to freeze assets and minimize losses, while the company stated that it only takes such actions when legally required or at the request of law enforcement and authorities. Tether has stated that it collaborates with law enforcement when wallets are linked to sanctions evasion or criminal networks, and has supported over 2,300 cases globally across 340 agencies in 65 countries.