Tether has recorded that about $4.2 billion worth of its tokens have been frozen due to their connection to illicit activities. Most of the freezing happened within the last three years.
The El Salvador-based company said the frozen funds were in one way or another connected to different types of financial crime. It explained that it works with law enforcement agencies around the world and can block tokens when authorities make formal requests.
Currently, Tether is one of the highest issuers of stablecoin. Its stablecoin USDT is designed to maintain a one-to-one value with the U.S. dollar. The company currently has more than $180 billion worth of USDT in circulation, an increase from its previous worth of $70 billion three years ago, showing how fast the stablecoin market has grown.
Tether’s Role in Helping to Fight Against Crypto Crimes
Because USDT runs on blockchain networks, Tether has the technical ability to remotely freeze tokens that are held in private crypto wallets. This means that even if the tokens are sitting in a user’s wallet, they can be restricted from moving if the assets are suspected to be linked with criminal activity and if law enforcement asks for action.
Earlier in the week, Tether said it helped the U.S. Department of Justice freeze nearly $61 million in USDT. The funds were allegedly connected to “pig-butchering” scams, a popular and rampant fraud system where criminals build fake personal relationships with victims over time before finally convincing them to invest money in their fake crypto schemes.
Also Read: Tether Backs Anchorage Digital with $100 Million Strategic Investment
The latest crackdown brought the total number of frozen USDT linked to illicit activity to $4.2 billion. According to a company spokesperson, about $3.5 billion of that amount has been frozen since 2023, showing that the enforcement efforts have increased in recent years.
Growing Pressure on Crypto Firms
Overall, many regulatory bodies around the world have warned individuals about the risks involved in the crypto market. Unlike traditional banks, many crypto platforms have operated with lighter regulation, making it easier for criminals to move funds across borders.
The Financial Action Task Force (FATF), an international body that monitors money laundering and terrorist financing, recently called on different countries around the world to take stronger action against risks in crypto markets. The watchdog urged governments to improve oversight and ensure that digital asset companies follow stricter compliance standards.
Also Read: Dogecoin (DOGE) Consolidation Phase Could Precede a Breakout to $0.15