Stablecoin issuer Tether has reportedly frozen about $4.2 billion of its USDt tokens linked to suspected criminal activity over the past three years.
The El Salvador-based firm reportedly told Reuters on Friday that most of the blocked funds were restricted from 2023 onwards, as regulators and law enforcement agencies stepped up investigations into crypto-related fraud and sanctions evasion.
Tether’s dollar-pegged USDt (USDT) token is the largest stablecoin in circulation, with more than $180 billion outstanding, up sharply from about $70 billion three years ago.
Tether can freeze tokens directly on the blockchain by blacklisting wallet addresses upon request by authorities.
Related: Tether-backed Oobit adds crypto-to-bank transfers to local payment networks.
Tether helps governments freeze funds.
On Tuesday, Tether announced that it had helped the US Department of Justice seize nearly $61 million USDt linked to “killing pigs” scams, a scheme in which criminals build relationships with victims before sending them money.
Earlier this month, the company also froze about $544 million worth of cryptocurrency at the request of Turkish authorities, allegedly blocking funds linked to illegal online betting and money laundering operations.
According to blockchain analytics firm Elliptic, by the end of 2025, stablecoin issuers Tether and Circle had blacklisted about 5,700 wallets holding about $2.5 billion, with about three-quarters of addresses containing USDt when they were frozen.
Related: Tether USDT supply set for biggest monthly drop since 2022 FTX collapse
USDt supply shrinks.
As Cointelegraph reported, USDt is on track for its biggest monthly supply decline in three years, with circulating supply falling to around $1.5 billion in February after a $1.2 billion drop in January, according to blockchain data. The contraction echoes the period following the collapse of FTX in late 2022 and could point to tighter liquidity in crypto markets.
Tether said the data reflected short-term distribution changes rather than weakening demand, noting that the USDC ( USDC ) also saw billions of dollars decline over the same period.
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