Tether freezes $4.2B USDT linked to crypto crime as regulators intensify crypto enforcement. Stablecoin supply grows beyond $180B globally.
The world’s largest stablecoin issuer has frozen billions of digital tokens tied to suspected crypto crime. The move is reflective of the increased cooperation between crypto companies and the worldwide law enforcement bodies.
Tether disclosed that it has frozen around $4.2 billion worth of its tokens. Authorities connected these funds to all sorts of illegal activity. Most freezes took place in the last 3 years. The action was followed by increasing requests from law enforcement agencies across the world.
According to Reuters, there was about $3.5 billion worth of frozen tokens in the figure after 2023. This significant increase indicates increased cooperation between crypto companies and investigators. Consequently, regulators are placing more pressure on companies that trade in digital assets to more closely monitor suspicious transactions.
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Tether is the company that issues the dollar-pegged stablecoin Tether, commonly referred to as USDT. The token currently has over $180 billion worth of them in circulation. This figure was a major jump from approximately $70 billion just 3 years ago, reflecting major global growth in stablecoin demand.
Authorities often demand token freezes when funds link up with scams or forbidden entities. Since blockchain transfers cannot easily be reversed, enforcement actions must come fast. Therefore, the crypto companies increasingly collaborate with investigators to prevent further movement of the suspected criminal funds.
Tether leverages the built-in smart contract tools in order to block suspicious wallet addresses. These functions enable the company to blacklist wallets that contain frozen tokens. As a result, the tokens are locked and cannot be used across supported blockchain networks such as Ethereum and Tron.
Recently, Tether supported a major investigation by the U.S. authorities. The company helped the United States Department of Justice and Homeland Security Investigations seize almost $61 million in USDT. Officials traced the money to large-scale schemes of online fraud.
Investigators referred to these operations as “pig-butchering” scams on the unwary victims. In these schemes, criminals establish a long-term trust before stealing digital assets. Consequently, world regulators are now considering such scams to be a major threat within crypto markets.
Authorities also linked frozen tokens with other criminal activities. These include human trafficking networks, sanctioned organizations, and conflict-related financing. For instance, some funds were tied by investigators to an approved Russian exchange, Garantex.
In addition, officials also traced certain transactions to activities involving conflicts in Israel and Ukraine. These findings have led to an increased amount of regulatory pressure on crypto infrastructure providers. Therefore, the stablecoin issuers are now under increasing expectations to cooperate with the global enforcement efforts.
Despite the massive freezes of assets, the market presence of Tether continues to increase rapidly. The stablecoin is still used extensively for trading, as well as for making remittances and cross-border payments.
The extent of frozen funds shows the impact stablecoin issuers are having on crypto oversight around the world. Their technical control offers the possibility for immediate response to suspicious activity. Therefore, enforcement actions involving token blacklisting could only increase with an increased focus from regulators on fighting financial crime in crypto.
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