On Thursday, Tether, the company behind the world's largest stablecoin, announced that it had frozen $344 million worth of USDT tokens in two wallets on the Tron blockchain, following requests from US authorities. The decision to freeze the assets was made after the addresses were linked to alleged illicit activities.
As a result, the movement of these funds has been halted. The company did not provide details about the nature of the activities or the owners of the wallets. However, according to blockchain analytics firm AMLbot, the addresses were mentioned 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 evading sanctions and laundering money.
While public blockchains allow transactions to be tracked, issuers have the ability to freeze assets under certain conditions. The issue gained attention earlier this month after the $285 million exploit of Drift Protocol, in which attackers moved large amounts of USDC stablecoin and transferred funds across chains.
Critics argued that Circle, the issuer of USDC, could have acted faster 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 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.
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. This effort is led by former White House crypto advisor Bo Hines.
Additionally, Tether is preparing for a full audit of its reserves for the first time, a step aimed at improving transparency and aligning with regulatory expectations for stablecoins.