After identifying illegal activity, Tether froze $85,877 worth of its USDT stablecoin. This action followed a user’s report that their Binance account had been hacked, leading to the draining of funds. However, this freeze is relatively minor compared to other larger-scale actions taken by Tether.
The Larger Freeze
In June, Tether froze $700 million across 112 wallets after U.S. authorities requested intervention. To date, Tether reports that it has frozen over $2.5 billion in USDT in collaboration with global law enforcement to combat illicit activities.
Addressing Concerns
The ability of Tether to identify and freeze funds at the smart contract level distinguishes stablecoins from other cryptocurrencies, such as Bitcoin and Ethereum. One of the key tenets of these digital assets is their decentralized nature and freedom from government oversight.
Privacy concerns have long been a significant factor in the preference for stablecoins over central bank digital currencies (CBDCs). Critics of the digital euro argued that it could be used to surveil citizens, though this claim has been denied by the European Central Bank.
Control and Privacy Issues
Interest in CBDCs has continued to wane in many countries. In the U.S., legislation banning a Federal Reserve-issued CBDC is progressing alongside new regulations for stablecoins. However, as more organizations such as retailers, tech giants, and leading banks plan to launch their own stablecoins, questions about usage enforcement and user data protection will persist.
