Tether, the company behind the world's largest stablecoin, announced on Thursday that it has frozen approximately $344 million worth of USDT tokens held in two wallets on the Tron blockchain. This move was made in response to requests from US authorities, who had flagged these addresses for suspected connections to illicit activities. As a result, any further movement of these funds has been prevented.
The nature of the alleged activities and the identities of those controlling the wallets were not disclosed by the company. However, according to blockchain analytics firm AMLbot, these addresses have been linked to scam-related documents and posts. 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. Public blockchains allow transactions to be traced, and under certain conditions, issuers have the ability to freeze assets. This issue gained attention earlier this month after the $285 million exploit of Drift Protocol, where attackers transferred hundreds of millions of USDC stablecoins and bridged funds across different chains. Critics argued that Circle, the issuer of USDC, could have acted more swiftly 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. Additionally, the company is expanding its presence in the US market with the launch of the USAT token, which complies with federal stablecoin regulations and is issued in partnership with federally regulated crypto bank Anchorage Digital, led by former White House crypto advisor Bo Hines. Tether is also preparing for its first full audit of reserves, a long-promised step towards improving transparency and aligning with stricter regulatory expectations for stablecoins.