Tether has reportedly frozen approximately $4.2 billion worth of its USDt tokens linked to suspected criminal activity over the past three years.
According to comments the El Salvador-based company gave to Reuters on Friday, the majority of those funds have been restricted since 2023, as regulators and law enforcement agencies ramped up efforts to combat crypto-related fraud and sanctions evasion.
Tether’s dollar-pegged USDt (USDT) remains the largest stablecoin in circulation, with more than $180 billion outstanding — a sharp increase from roughly $70 billion three years ago. The company has the ability to freeze tokens directly on-chain by blacklisting wallet addresses at the request of authorities.
Tether assists governments in freezing funds
On Tuesday, Tether said it helped the United States Department of Justice seize nearly $61 million in USDt tied to so-called “pig-butchering” scams, in which fraudsters cultivate relationships with victims before convincing them to transfer money.
Earlier this month, the firm also froze around $544 million in cryptocurrency at the request of Turkish authorities, blocking assets allegedly connected to an illegal online betting and money-laundering scheme.
Blockchain analytics company Elliptic reported that by late 2025, stablecoin issuers Tether and Circle had blacklisted roughly 5,700 wallets holding a combined $2.5 billion, with about three-quarters of those addresses containing USDt at the time they were frozen.
USDt supply declines
As previously reported, USDt is on pace for its largest monthly supply contraction in three years. Circulating supply fell by approximately $1.5 billion in February, following a $1.2 billion drop in January, according to blockchain data. The pullback mirrors trends seen after the collapse of FTX in late 2022 and could signal tightening liquidity conditions across crypto markets.
Tether said the figures represent short-term shifts in distribution rather than a decline in overall demand, adding that USDC also experienced a multibillion-dollar reduction in supply over the same period.
