Tether has frozen roughly $4.2 billion in USDT over the last three years as part of investigations tied to suspected illicit activity, according to a recent report.
Most of that amount, about $3.5 billion, was frozen from 2023 onward. The jump reflects how much more closely crypto firms are now working with law enforcement. It also shows how much pressure stablecoin issuers are under as regulators push for tighter guardrails across digital asset markets.
USDT is still the largest stablecoin by a wide margin, with supply sitting above $100 billion. Unlike decentralized tokens, USDT is issued by a central entity. That means Tether can block specific wallet addresses when necessary. The company says it uses that authority in response to official requests related to fraud, sanctions breaches and money laundering probes.
In one recent case, Tether worked alongside the U.S. Department of Justice to freeze around $61 million in USDT linked to pig butchering scams. These operations typically involve weeks or months of relationship-building before victims are steered toward fake investment platforms. By the time funds move, the damage is often substantial.
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The company has also assisted in investigations tied to online betting rings and cross-border laundering schemes. Over time, the number of blacklisted wallets has steadily grown.
That trend highlights a shift in the role stablecoin issuers now play. They are no longer operating only as payment rails. When law enforcement submits a request, companies like Tether now move to block wallets and restrict funds linked to investigations. Some in crypto argue that this undermines the industry’s original promise of censorship resistance. Others counter that without intervention, large stablecoins risk becoming magnets for abuse.
As regulators across the United States, Europe and Asia continue drafting stablecoin frameworks, Tether’s enforcement activity shows how the sector is evolving. Centralized control, once viewed as a weakness, has become a feature regulators expect.
