Stablecoin issuer Tether says it has frozen about $4.2 billion worth of its USDt tokens linked to suspected criminal activity over the past three years. The company told Reuters most of those funds were restricted since 2023 as regulators and law enforcement stepped up scrutiny of crypto-related fraud and sanctions evasion.
Tether’s USDt token is the largest stablecoin, with more than $180 billion outstanding, up from roughly $70 billion three years ago. The firm can blacklist wallet addresses and effectively freeze tokens on-chain when requested by authorities.
Tether recently assisted the U.S. Department of Justice in seizing nearly $61 million in USDt tied to “pig-butchering” investment scams, in which fraudsters build relationships with victims before convincing them to send funds. Earlier in February, Tether froze about $544 million at the request of Turkish authorities in an alleged illegal online betting and money‑laundering case.
Blockchain analytics firm Elliptic reported that by late 2025 stablecoin issuers including Tether and Circle had blacklisted around 5,700 wallets holding roughly $2.5 billion, with about three-quarters of those wallets containing USDt at the time of freezing.
USDt’s circulating supply has also contracted recently. Blockchain data show a roughly $1.5 billion drop in February following a $1.2 billion decline in January — the largest monthly reduction in about three years — a contraction reminiscent of the liquidity shifts after the 2022 FTX collapse. Tether says these movements reflect short-term distribution changes rather than weakening demand, noting that USDC saw multibillion-dollar reductions over the same period.
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