Coinfeeds Daily → Tether Freezes $225 Million in USDT Linked to Criminal Activities

Tether Freezes $225 Million in USDT Linked to Criminal Activities

Published: Nov 21, 2023 | Last Updated: Mar 17, 2024
Howard Kane

Collaborative effort with law enforcement to combat illicit use of stablecoin, setting a new safety standard in the cryptocurrency industry

In a significant move to combat illicit activities within the cryptocurrency space, Tether has taken decisive action by freezing approximately $225 million worth of its stablecoin, USDT. This measure was taken in response to an investigation that pointed to the involvement of these funds in criminal activities, specifically a human trafficking syndicate operating in Southeast Asia.

Collaboration with Law Enforcement

Tether's decision to freeze the funds came as part of a collaborative effort with the U.S. Department of Justice (DOJ) and the involvement of cryptocurrency exchange OKX. The investigation led to the identification of self-custodied wallets that were reportedly used by the criminal syndicate to launder money. By freezing these wallets, Tether has effectively prevented the transfer or exchange of the USDT they contained, which were found on the secondary market and not held by Tether's direct customers.

Combating "Pig-Butchering" Scams

The frozen funds are allegedly connected to a type of scam known as "pig-butchering," which involves scammers forming online relationships to gain the trust of their victims. Once trust is established, victims are persuaded to invest in fraudulent cryptocurrency platforms controlled by the scammers. The term "pig-butchering" refers to the way scammers 'fatten up' their victims with affection and attention before financially 'slaughtering' them.

Setting a Safety Standard

Tether's involvement in the freezing of these funds is part of a broader commitment to setting a new standard for safety and integrity within the cryptocurrency industry. The stablecoin issuer has utilized blockchain analysis tools to track the movement of the funds, demonstrating the potential for technology to play a crucial role in identifying and preventing financial crimes. Tether has stated its willingness to work with law enforcement to unfreeze any wallets that are found to be lawful and not involved in the criminal operation.

Impact on the Crypto Community

This action by Tether sends a strong message to the crypto community about the importance of vigilance and cooperation with law enforcement to ensure the integrity of the cryptocurrency ecosystem. It also highlights the challenges faced by stablecoin issuers like Tether, which have previously faced controversies over the backing of their stablecoins. By taking a proactive stance against criminal activities, Tether aims to reinforce trust in its operations and the broader digital asset market.

In conclusion, Tether's freezing of $225 million in USDT serves as a reminder of the ongoing battle against financial crime in the digital age. It underscores the need for continuous monitoring, technological advancement, and collaboration between private entities and government agencies to protect consumers and maintain a secure and transparent financial environment.

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