Tether halts $344 million in USDT on Tron network linked to ‘illicit activity’
The stablecoin provider stated the measure was taken in response to requests from U.S. law enforcement agencies, as the Financial Action Task Force (FATF) highlights the increasing involvement of digital dollars in illegal financial channels.
What to know:
— Tether confirmed the freezing of $344 million in USDT stablecoin on the Tron blockchain due to suspected illegal activity.
— The firm noted that the action was coordinated with U.S. authorities.
— This development occurs amid growing scrutiny over the role of stablecoin issuers in preventing illicit money transfers.
Tether, the cryptocurrency firm behind the world’s largest stablecoin, announced on Thursday that it has frozen $344 million in USDT tokens across two wallets on the Tron blockchain following requests from U.S. officials.
The freeze was executed after authorities identified the addresses as allegedly connected to illicit activity, the company stated in a Thursday blog post. This action stopped any further movement of the funds.
Tether did not disclose the specific nature of the activity or the identity of the wallet controllers. Blockchain analytics firm AMLbot noted that the addresses appeared in scam-related documents and posts.
This move comes as debate over the role and responsibility of stablecoin issuers in stopping funds linked to illegal money transfers is back in the spotlight. The Financial Action Task Force recently warned that stablecoins are increasingly used for illicit transactions, including sanctions evasion and money laundering. Public blockchains allow transactions to be traced, while issuers retain the ability to freeze assets under certain conditions.
The issue came into focus 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 (CRCL), the issuer of USDC, could have acted faster to freeze assets and limit losses, while the company said it only takes such actions when legally required or at request by law enforcement and authorities.
Tether said it works with law enforcement when wallets are tied to sanctions evasion or criminal networks, and has supported more than 2,300 cases globally across 340 agencies in 65 countries.
The company is also pushing deeper into the U.S. market. It launched the USAT token compliant with federal stablecoin regulation, issued in partnership with federally regulated crypto bank Anchorage Digital, with the effort led by former White House crypto advisor Bo Hines.
Tether is also preparing for a full audit of its reserves for the first time, a long-promised step as the firm seeks to improve transparency and align more closely with tighter regulatory expectations toward stablecoins.
UPDATE (April 23, 15:30 UTC): Adds context about Tether’s U.S. expansion.