On Thursday, Tether, the company behind the world's largest stablecoin, announced that it has frozen approximately $344 million worth of USDT tokens held across two wallets on the Tron blockchain. This move follows requests from US authorities, who had flagged the addresses for suspected connections to illicit activities. As a result, the funds can no longer be transferred.
The nature of the activities and the identities of the wallet holders were not disclosed by the company. However, according to AMLbot, a blockchain analytics firm, these addresses have appeared in documents and posts related to scams.
The decision to freeze the assets comes at a time when the role of stablecoin issuers in preventing the movement of funds linked to illegal transactions is under scrutiny. Recently, the Financial Action Task Force warned that stablecoins are increasingly being used for illicit purposes, including money laundering and sanctions evasion.
While public blockchains allow transactions to be traced, issuers have the ability to freeze assets under specific conditions. This issue gained attention earlier this month following the $285 million Drift Protocol exploit, 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 more quickly to freeze assets and minimize losses, while 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 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 and was issued in partnership with Anchorage Digital, a federally regulated crypto bank. This effort is led by former White House crypto advisor Bo Hines. Furthermore, Tether is preparing for its first full audit of reserves, a long-promised step aimed at improving transparency and aligning with tighter regulatory expectations for stablecoins.