In a move to comply with US law enforcement requests, Tether, the prominent stablecoin issuer, has frozen approximately $344 million worth of USDT tokens across two wallets on the Tron blockchain. The action was taken due to alleged links to illicit activities, as flagged by authorities.
As a result, further movement of these funds has been prevented. The nature of the activity and the controllers of the wallets were not specified by the company.
However, according to blockchain analytics firm AMLbot, the addresses in question appeared in documents and posts related to scams. This development comes at a time when the role of stablecoin issuers in stopping funds linked to illegal money transfers is under scrutiny. The Financial Action Task Force has recently warned about the increasing use of stablecoins for illicit transactions, including sanctions evasion and money laundering.
The transparency of public blockchains allows transactions to be traced, while issuers have the ability to freeze assets under specific conditions. Tether has stated that it collaborates with law enforcement when wallets are linked to sanctions evasion or criminal networks, supporting 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, in partnership with Anchorage Digital, a federally regulated crypto bank.
Furthermore, Tether is preparing for a comprehensive audit of its reserves, a step aimed at enhancing transparency and aligning with regulatory expectations for stablecoins.