On Thursday, Tether, the company behind the world's largest stablecoin, announced that it had frozen $344 million in USDT tokens across two Tron blockchain wallets, acting on requests from US authorities. The decision to freeze the funds was made after the addresses were flagged for suspected ties to illicit activities, effectively preventing any further movement of the assets.
The nature of the activities and the individuals controlling the wallets were not disclosed by the company. However, blockchain analytics firm AMLbot indicated that the addresses appeared in documents and posts related to scams. This move by Tether 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 cautioned that stablecoins are increasingly being used for illicit transactions, including the evasion of sanctions and money laundering. While public blockchains allow for the tracing of transactions, issuers have the capability to freeze assets under specific conditions. The issue gained attention earlier this month following 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.
In response, the company stated that it only takes such actions when legally required or at the request of law enforcement and relevant authorities. Tether emphasized its cooperation with law enforcement in cases where wallets are linked to sanctions evasion or criminal networks, having 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, under the leadership of former White House crypto advisor Bo Hines. Additionally, Tether is preparing for its first comprehensive audit of reserves, a long-promised step towards enhancing transparency and aligning with stricter regulatory expectations for stablecoins.