Tether Freezes $12.3 Million in USDT to Combat Illicit Activities

Tether, the issuer of the world’s largest stablecoin USDT, has taken a significant step in its ongoing efforts to combat illicit activities within the cryptocurrency space by freezing over $12.3 million worth of digital assets on the Tron Network. This action, executed at 9:15 am UTC on June 15, underscores Tether's commitment to maintaining the integrity of its stablecoin and adhering to regulatory standards.

The freeze is likely a response to concerns over potential sanctions violations or Anti-Money Laundering (AML) risks. Tether's policy aligns with the US Treasury’s Office of Foreign Assets Control (OFAC) sanctions list, which includes the Specially Designated Nationals (SDN) List. This policy is part of Tether's broader strategy to combat money laundering, nuclear proliferation, and terrorist financing.

This is not the first time Tether has taken such action. In March, Tether froze $27 million in USDT on the Garantex crypto exchange, which subsequently halted operations. Garantex was later sanctioned by OFAC in April 2022 for disregarding AML and other regulatory requirements. Despite the previous freeze, blockchain analytics identified more than $15 million in active reserves tied to Garantex on June 5, highlighting the persistent challenges in the crypto space.

Tether's asset-freezing abilities have been a subject of debate among decentralization advocates. However, the mechanism has proven effective in preventing hundreds of millions of dollars worth of crypto from being laundered by illicit actors. The T3 Financial Crimes Unit (FCU), a collaborative effort between Tether, the Tron Network, and TRM Labs, froze $126 million worth of USDT in its first six months. The FCU was established to assist law enforcement agencies worldwide in freezing illicit transactions, demonstrating Tether's proactive approach to combating financial crimes.

The Lazarus Group, a notorious crypto hacking group backed by North Korea, has been a significant target of these initiatives. The group, which emerged in 2009, has stolen over $3 billion in crypto assets in the six years leading up to 2023. Between 2020 and 2023, the Lazarus Group laundered over $200 million worth of stolen crypto. In November 2023, Tether blacklisted over $374,000 worth of stolen funds, while three out of four stablecoin issuers blacklisted an additional $3.4 million sitting in a cluster of addresses associated with Lazarus. These actions underscore the importance of Tether's initiatives in maintaining the security and integrity of the cryptocurrency ecosystem.