Stablecoin issuer Tether has reportedly frozen approximately $4.2 billion of its USDt tokens linked to suspected criminal activity over the past three years.
Most of the blocked funds have been restricted from 2023 as regulators and law enforcement agencies step up investigations into crypto fraud and sanctions evasion, an El Salvador-based firm reportedly told Reuters on Friday.
Tether’s USDt token (USDT) is the largest stablecoin in circulation, with more than $180 billion in circulation, up nearly $70 billion from three years ago.
Tether can freeze tokens directly on the blockchain by blacklisting wallet addresses when requested by authorities.
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Tether helps governments freeze funds
On Tuesday, Teter announced that he had helped the US Department of Justice seize nearly $61 million linked to a “pig extortion” scam, a scheme in which criminals establish relationships with victims before tricking them into sending them money.
Earlier this month, the company also froze approximately $544 million in cryptocurrency at the request of Turkish authorities, freezing funds linked to illegal online betting and money laundering operations.
According to blockchain analytics firm Elliptic, by the end of 2025, stablecoin issuers Tether and Circle have blacklisted around 5,700 wallets holding around $2.5 billion, with around three-quarters of addresses holding USDt during the freeze.
related to: Tether USDT supply set for biggest monthly drop since FTX collapse in 2022
The dollar is falling
As Cointelegraph reported, USDt is on track for its biggest monthly supply drop in three years, with circulating supply down nearly $1.5 billion after a $1.2 billion drop in January, according to blockchain data. The decline corresponds to the period following the collapse of FTX in late 2022 and may indicate extreme liquidity in the crypto markets.
Teter said the numbers reflect short-term changes in allocations rather than weakening demand, noting that the USDC ( USDC ) also saw a multibillion-dollar decline over the same period.
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