Tether confirmed it has frozen approximately $4.2 billion worth of its USDT stablecoin due to links with illicit activity. The company stated that most of these freezes occurred over the past three years as global enforcement efforts intensified.
Tether retains the ability to remotely freeze tokens held in crypto wallets when requested by law enforcement. This week, Tether assisted the U.S. Justice Department in freezing nearly $61 million in USDT tied to "pig-butchering" scams. This action brings Tether's cumulative enforcement total to $4.2 billion, with roughly $3.5 billion frozen since 2023.
The stablecoin issuer has also blocked wallets connected to human trafficking networks and individuals linked to conflicts in Israel and Ukraine. Russian crypto exchange Garantex previously reported Tether freezing funds on its platform.
Regulators worldwide are increasing scrutiny on cryptocurrency's role in financial crime. The Financial Action Task Force urged countries to step up enforcement in less regulated crypto markets. Blockchain researchers reported at least $82 billion in cryptocurrency was received by money launderers last year.
Stablecoins like USDT are frequently used for exchange liquidity and cross-border transactions. Tether's capacity to freeze tokens demonstrates control mechanisms, though critics argue this challenges decentralization. As global regulators push for stronger anti-money laundering standards, stablecoin issuers face tighter compliance requirements.
Tether's recent actions signal cooperation with market intentions, indicating a shift in how governments approach the digital asset market. Crypto is now viewed as a mainstream market, with increased pressure on intermediaries to comply with traditional financial crime regulations.