Blockchain-based platform Tether has halted approximately USD 4.2 billion in USDT linked to illegal activities, according to a Reuters report.
About USD 3.5 billion out of that sum was frozen since 2023, signaling an increase in enforcement efforts over the past couple of years. This announcement follows Tether’s previous freeze of more than USD 500 million in digital assets related to a suspected Turkish gambling and money laundering network just two weeks earlier.
Tether has now stated that it cooperated with the U.S. Department of Justice in ongoing investigations. One significant action involved freezing nearly USD 61 million tied to so-called ‘pig-butchering’ scams, a prolonged form of social engineering fraud where perpetrators develop trust with victims over time before manipulating them into transferring funds, often into fraudulent investment schemes. Such scams have increasingly targeted cryptocurrency users across various markets.
Regulatory and Law Enforcement Collaboration
The scale of these freezes underscores a shift in how centralized stablecoin issuers engage with regulatory and law enforcement entities. Rather than operating merely as payment systems, Tether has taken an active role in supporting investigations, including the ability to blacklist wallets and freeze funds at the individual address level.
This technical capability is unique to centralized stablecoins, where the issuer maintains administrative control over token transactions. It contrasts with decentralized protocols, which lack such singular authority.
Market Landscape
Despite these large-scale freezes, Tether’s circulating supply has exceeded USD 180 billion, continuing to hold the top spot as the largest stablecoin by market capitalization. The concurrent expansion in both usage and enforcement actions reflects the growing integration of digital assets into regulated financial systems.
These developments occur amid ongoing efforts by U.S. and European regulators to establish frameworks for stablecoin issuance and supervision. For stablecoin operators, a rising collaboration with law enforcement is becoming an integral aspect of large-scale market participation, rather than an occasional exception.
