Tether, the company behind the world's most widely used stablecoin, has announced the freezing of $344 million in USDT tokens across two Tron blockchain wallets. This action was taken in response to requests from US authorities, who had flagged the addresses due to alleged connections to illicit activities. As a result, further movement of these funds has been prevented. The nature of the illicit activity and the identities of the wallet holders have not been disclosed by Tether.
However, according to blockchain analytics firm AMLbot, the addresses in question have been linked to 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 illegal activities is under scrutiny.
The Financial Action Task Force has recently cautioned that stablecoins are increasingly being used for illicit transactions, including the evasion of sanctions and money laundering. The transparency of public blockchains allows for the tracing of transactions, while issuers have the ability to freeze assets under specific conditions.
This issue has gained attention following the $285 million exploit of Drift Protocol, in which attackers transferred hundreds of millions of USDC stablecoins and bridged funds across multiple chains. Critics have argued that Circle, the issuer of USDC, could have acted more swiftly to freeze 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 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.
The company is also expanding its presence in the US market with the launch of the USAT token, which complies with federal stablecoin regulations. This effort is being led by former White House crypto advisor Bo Hines, in partnership with federally regulated crypto bank Anchorage Digital.
Furthermore, Tether is preparing for a comprehensive audit of its reserves for the first time, a long-promised step aimed at enhancing transparency and aligning with stricter regulatory expectations for stablecoins.