Tether Freezes $344M in USDT Following Request From U.S. Law Enforcement

A fresh wave of DeFi hacks in April has reignited a familiar dispute in crypto: should centralized stablecoin issuers block funds once stolen assets flow through their rails? Tether, the world's largest stablecoin issuer, has put that debate back in the spotlight after disclosing it froze more than $340 million worth of dollar-pegged tokens at the direct request of U.S. law enforcement. The company said the action covered two separate wallet addresses. It described the funds as tied to unlawful activity but did not specify the alleged conduct or identify the parties behind the wallets. In line with its publicly stated policy, Tether said it coordinates wallet freezes when it finds credible links to sanctioned entities, criminal networks, or other illegal activity. CEO Paolo Ardoino defended the move, saying the company acts "immediately and decisively" when such links are established. Tether did not provide additional comment beyond the statement. The freeze was coordinated with the Office of Foreign Assets Control (OFAC), the U.S. Treasury agency that enforces economic sanctions. Market observers say the involvement of OFAC underscores active cooperation between a major stablecoin issuer and federal authorities as regulatory scrutiny of the sector continues to rise. The decision drew criticism from some corners of the crypto community. Crypto outlet Truth for The Commoner argued that the episode highlights the degree of control centralized issuers retain over assets that circulate on public blockchains: "Your stablecoins are not your stablecoins. They never were," the outlet posted. The announcement follows heightened scrutiny after the Drift Protocol exploit, which drained $280 million from the platform. Onchain investigator ZachXBT criticized Circle, issuer of USDC, for not freezing funds after the attacker allegedly moved stolen assets through Circle's native bridge over six consecutive hours. ZachXBT wrote that "no USDC was frozen," adding that centralized issuers should respond rapidly while hacks are ongoing. The episode has renewed calls across the industry for clearer standards on when and how stablecoin companies should intervene when hacks unfold in real time.