Tether, the company behind the world's most widely used stablecoin, announced on Thursday that it has frozen approximately $344 million in USDT tokens held across two wallets on the Tron blockchain. This move was made in response to requests from US authorities, who had flagged these addresses due to suspected links to illicit activities. As a result, the funds in question are now prevented from being transferred further.
The nature of the illicit activity and the identities of the wallet owners were not disclosed by Tether. However, according to AMLbot, a blockchain analytics firm, these addresses have appeared in documents and posts related to scams. The decision to freeze these assets comes at a time when the role of stablecoin issuers in preventing the transfer of funds linked to illegal activities is under scrutiny.
Recently, the Financial Action Task Force (FATF) warned that stablecoins are increasingly being used for illicit transactions, including the evasion of sanctions and money laundering. While public blockchains allow for the tracing of transactions, issuers have the capability to freeze assets under specific conditions. This issue gained attention earlier this month following the $285 million exploit of Drift Protocol, where attackers transferred hundreds of millions of USDC stablecoins and moved funds across different chains. Critics argued that Circle, the issuer of USDC, should have acted more swiftly to freeze the assets and minimize losses.
In response, Circle stated that it only takes such actions when legally required or at the request of law enforcement and relevant authorities. Tether has stated that it collaborates with law enforcement agencies when wallets are linked to sanctions evasion or criminal networks, and has supported over 2,300 cases globally across 340 agencies in 65 countries. Additionally, the company is expanding its presence in the US market with the launch of the USAT token, which complies with federal stablecoin regulations. This token was issued in partnership with Anchorage Digital, a federally regulated crypto bank, with the effort being led by former White House crypto advisor Bo Hines.
Tether is also preparing for its first comprehensive audit of reserves, a step that has been long-promised as the firm seeks to enhance transparency and align more closely with regulatory expectations regarding stablecoins.