How Much Has Tether Frozen — and Why?
Tether said it has frozen about $4.2 billion worth of its USDT stablecoin over links to “illicit activity,” with most of those actions taking place in the past three years. The disclosure comes as authorities worldwide intensify efforts to curb crypto-related crime.
The company, which issues the world’s largest dollar-pegged stablecoin, has more than $180 billion of USDT in circulation, up from roughly $70 billion three years ago. Tether can remotely freeze tokens held in users’ crypto wallets when requested by law enforcement agencies.
This week, Tether said it assisted the U.S. Justice Department in freezing nearly $61 million in USDT tied to “pig-butchering” schemes — a form of fraud in which scammers build personal relationships with victims before extracting funds. According to a company spokesperson, $3.5 billion of the $4.2 billion total has been frozen since 2023.
Investor Takeaway
What Types of Activity Are Being Targeted?
Tether has previously said it blocked wallets connected to human trafficking as well as “terrorism and warfare” linked to Israel and Ukraine. Sanctioned Russian crypto exchange Garantex said last year that Tether had frozen funds on its platform.
The growing list of enforcement actions highlights the dual nature of stablecoins. While primarily used for crypto trading and liquidity management, they have also appeared in investigations involving fraud networks, sanctions evasion, and cross-border financial crime.
Authorities have long warned that digital assets can be exploited for illicit finance. The Financial Action Task Force last year called on countries to strengthen oversight of crypto markets, which remain less regulated than traditional financial systems in many jurisdictions.
How Big Is the Illicit Crypto Economy?
Blockchain researchers said in January that money launderers received at least $82 billion in cryptocurrencies last year, up from $10 billion in 2020. The rise was partly attributed to growth among Chinese-speaking criminal groups.
At the same time, stablecoin volumes have expanded sharply as crypto trading activity has grown. Stablecoins are widely used as settlement assets and liquidity tools across exchanges and decentralized finance platforms.
The combination of scale and transferability makes large stablecoin issuers central to enforcement efforts. When tokens can be frozen at the issuer level, authorities gain a control mechanism that does not exist with decentralized cryptocurrencies such as bitcoin.
What Does This Mean for Stablecoin Oversight?
Tether’s figures arrive amid ongoing global debate over stablecoin regulation. Policymakers in the United States and Europe are drafting frameworks that would place clearer compliance obligations on issuers, including anti-money-laundering standards and cooperation requirements with law enforcement.
The $4.2 billion figure may serve two purposes: demonstrating responsiveness to enforcement agencies and highlighting the scale at which stablecoins intersect with illicit activity investigations. For regulators, the question is whether voluntary cooperation is sufficient or whether formal supervisory regimes are required.
As stablecoin supply continues to expand, enforcement transparency is likely to become a key issue. The more USDT circulates across global markets, the more often its freeze function may be tested.
