Tether Freezes $344M in USDT in Coordination With U.S. Authorities

Tether said it froze $344 million worth of USDT tied to suspected illicit activity after coordinating with U.S. law enforcement. The company stated the action covered two wallet addresses flagged for potential criminal use, with authorities requesting immediate intervention. The disclosure comes as regulators and blockchain analysts intensify scrutiny of stablecoins following a string of large-scale DeFi exploits in 2026. Tether positioned the move as evidence of a compliance model designed to respond quickly when questionable flows are detected. In its statement, Tether said it can block transactions and freeze assets at the smart-contract level once a wallet is linked to sanctions evasion, fraud, or organized crime. The process, it added, aligns with guidance from the Office of Foreign Assets Control (OFAC), including its Specially Designated Nationals (SDN) list. Tether did not identify the specific case or entities involved. Tether reported working with more than 340 law-enforcement agencies across 65 jurisdictions. It said those collaborations span over 2,300 cases and have led to more than $4.4 billion in USDT being frozen to date. U.S. authorities represented a significant portion, with more than 1,200 cases and about $2.1 billion in frozen funds. CEO Paolo Ardoino said the company moves quickly after wallets are connected to illicit activity, warning that delays can increase risk for users and the wider financial system. Tether also used the announcement to bolster USDT's positioning in DeFi security discussions. After recent DeFi exploits, competitor Circle has faced criticism for allegedly moving slowly to freeze stolen USDC. The debate intensified following the $285 million hack of Drift Protocol, when pseudonymous investigator ZachXBT said Circle could have frozen much of the USDC but did not act. ZachXBT also cited 14 other incidents where stolen USDC was not frozen even as other issuers moved quickly. Against that backdrop, Tether said it provided $127.5 million in bailout funding to Drift Protocol as part of a recovery plan. In return, the Solana-based protocol agreed to use USDT as its primary stablecoin instead of USDC. DeFi security concerns have remained elevated after the KelpDAO hack. The issue of freezing and clawing back assets remains contentious, with some criticism directed at Arbitrum's decision to claw back about $71 million from the KelpDAO hacker. The post "Tether Froze Nearly $350 million in Coordination With U.S. Authorities" appeared first on The Market Periodical.