Tether Freezes $4.2 Billion in Illicit Funds, DOJ Collaboration
Tether, the issuer of USDT, the world's largest stablecoin by market capitalization, has frozen approximately $4.2 billion in USDT linked to various illicit activities. A significant portion, around $3.5 billion, has been blocked since 2023. This cumulative action was initially reported by Reuters.
Tether maintains direct control over the smart contracts governing token issuance and transfer, allowing it to blacklist specific blockchain wallet addresses. Once blacklisted, any USDT held becomes unusable and untransferable, disrupting criminal operations by preventing the liquidation or movement of illicit gains.
The illicit activities linked to these frozen funds span various criminal cases. A recent instance involved Tether's assistance to the U.S. Department of Justice (DOJ), freezing approximately $61 million in USDT linked to 'pig-butchering' scams.
Community Reaction: Centralization vs. Crime Fighting
The announcement of the extensive USDT freeze drew diverse reactions across the crypto community. Some social media reports showed positive sentiment (e.g., scores of 62, 60, 46) acknowledging Tether's role in combating illicit activities.
Conversely, the scale of the freeze also spurred discussions regarding the centralized power inherent in stablecoin operations. Some reactions expressed apprehension about a single entity's unilateral ability to freeze substantial amounts of funds. For instance, a high-engagement account posted about the freeze with a sentiment score of -50, while another questioned the security of holding USDT, registering a sentiment score of -4.
Tether's Market Position Amidst Enforcement
Despite ongoing enforcement actions and collaboration with global law enforcement, USDT retains its position as the largest stablecoin by circulating supply.