Tether, the company behind the world's largest stablecoin, has announced that it has frozen $344 million worth of USDT tokens held in two wallets on the Tron blockchain, following requests from US authorities. The decision to freeze the assets was made after the wallets were linked to suspected illicit activity, according to a blog post published by the company on Thursday. As a result, further movement of the funds has been prevented. The nature of the activity and the identities of the individuals controlling the wallets have not been disclosed by Tether.
However, according to AMLbot, a blockchain analytics firm, the addresses in question 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. The Financial Action Task Force has recently warned that stablecoins are increasingly being used for illicit transactions, including the evasion of sanctions and money laundering. While public blockchains allow transactions to be traced, 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 transferred hundreds of millions of USDC stablecoins and bridged funds across multiple chains. Critics argued that Circle, the issuer of USDC, could have acted more swiftly to freeze assets and minimize losses, while the company maintained that it only takes such actions when legally required or at the request of law enforcement and regulatory authorities.
Tether has stated that it collaborates with law enforcement agencies 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, having launched the USAT token, which is compliant with federal stablecoin regulations, in partnership with Anchorage Digital, a federally regulated crypto bank. The effort is being led by former White House crypto advisor Bo Hines.
Additionally, Tether is preparing to conduct a full audit of its reserves for the first time, a long-promised step aimed at enhancing transparency and aligning more closely with regulatory expectations for stablecoins.