Tether Freezes $334 Million in Stablecoins Linked to Illegal Activity

Stablecoin issuer Tether said it has frozen $344 million in stablecoins linked to illegal activity.

The company announced the freeze Thursday (April 23), saying it came following information shared by U.S. authorities about activity connected to unlawful actions.

“When wallets are identified as connected to sanctions evasion, criminal networks, or other illicit activity, Tether can move to restrict those assets,” the company wrote in a blog entry. “That work has become a routine part of the company’s response to lawful requests from authorities in the U.S. and abroad.”

Tether, whose USDT is the largest stablecoin by volume, added that it has been involved in supporting law enforcement in 2,300 cases around the world, leading to the freezing of more than $4.4 billion in assets.

Public blockchains, the company argued, offer investigators and issuers something cash can’t: a visible trail that lets them follow transactions, flag wallets and freeze assets.

“USDT is not a safe haven for illicit activity,” said Paolo Ardoino, CEO of Tether. “When credible links to sanctioned entities or criminal networks are identified, we act immediately and decisively. Recent events have shown what happens when platforms fail to move quickly, enforcement breaks down, users are exposed, and trust erodes.”

The company’s announcement comes in the wake of a high-profile crypto crime that has erased around $9 billion from the decentralized finance (DeFi) lending space: last week’s exploit of the Kelp DAO platform.

In the most recent episode of the “From the Block” podcast, PYMNTS CEO Karen Webster and Ryan Rugg, global head of digital assets for Citi Treasury and Trade Solutions, examined why that exploit was not just a technical failure, but a behavioral one.

While earlier attacks targeted private keys or flawed smart contracts, this breach was aimed at the connective tissue of blockchain ecosystems: the messaging layer that allows for interoperability across chains.

“Past hacks were due to stolen keys or bugs in smart contracts; this one was convincing the vault the thief was actually the owner,” Rugg said.

Meanwhile, Tether is helping another DeFi exchange—Drift Protocol—relaunch after a separate breach earlier this month, giving that company $147 million in funding.

Drift announced the funding last week, as well as the news that it would begin using Tether as its settlement layer, rather than previous settlement partner Circle.