Tether, the company behind the world's largest stablecoin, has frozen $344 million worth of USDT tokens on the Tron blockchain, following requests from US authorities. The decision to freeze the assets was made after the addresses were flagged for alleged links to illicit activity. As a result, further movement of the funds has been prevented.
The nature of the activity and the individuals controlling the wallets have not been disclosed. However, according to blockchain analytics firm AMLbot, the addresses have been linked to scam-related documents and posts. This move comes as the debate surrounding the role of stablecoin issuers in preventing illegal money transfers continues.
The Financial Action Task Force has recently warned that stablecoins are increasingly being used for illicit transactions, including sanctions evasion and money laundering. The issue has gained attention this month following the $285 million exploit of Drift Protocol, in which attackers moved hundreds of millions of USDC stablecoin and bridged funds across chains. Critics argued that Circle, the issuer of USDC, could have acted faster to freeze assets and limit losses.
Tether has stated that it works with law enforcement when wallets are tied to sanctions evasion or criminal networks and has supported over 2,300 cases globally. The company is also expanding its presence in the US market with the launch of the USAT token, which is compliant with federal stablecoin regulation.
Furthermore, Tether is preparing for a full audit of its reserves, a step aimed at improving transparency and meeting regulatory expectations.