In a move to combat alleged illicit activity, Tether has frozen approximately $344 million worth of USDT tokens held across two wallets on the Tron blockchain. This action was taken in response to requests from US authorities, who had flagged the addresses due to suspected links to illicit activity. As a result, further movement of these funds has been prevented. The nature of the activity and the individuals controlling the wallets have not been disclosed by the company.
However, according to blockchain analytics firm AMLbot, the addresses in question have appeared in documents and posts related to scams. 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.
Recently, the Financial Action Task Force warned 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 stablecoin and bridged funds across chains.
Critics argued that Circle, the issuer of USDC, could have acted more swiftly to freeze assets and minimize losses. In response, 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 tied 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, having launched the USAT token, which complies with federal stablecoin regulations, in partnership with federally regulated crypto bank Anchorage Digital. This effort is being led by former White House crypto advisor Bo Hines.
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.