Tether’s Mega-Freeze: $344M USDT Locked Down In Major Operation With US Authorities

Crypto giant Tether disclosed that it has supported the US government in freezing $344 million in USDT held in two Tron wallets, following a request from the Office of Foreign Assets Control (OFAC) and US law enforcement. 

Tether’s Latest Crackdown

According to Tether’s Thursday disclosure, the freeze came after authorities allegedly identified the wallets as linked to sanctions evasion, criminal networks, or other illicit activity. 

The company framed this as part of its routine response to lawful requests from governments in the US and abroad, noting that it works with more than 340 law enforcement agencies across 65 countries.

In a statement, Tether CEO Paolo Ardoino emphasized that USDT should not be used as a “safe haven” for wrongdoing. He argued that when Tether sees credible links to sanctioned entities or criminal networks, it acts quickly and decisively. 

Beyond this specific freeze, Tether said its broader cooperation has supported more than 2,300 cases globally, including over 1,200 tied to US law enforcement. 

The company added that those efforts have contributed to the freezing of more than $4.4 billion in assets, including over $2.1 billion linked to US authorities.

Circle Under Fire 

Tether’s move comes as the industry’s second-largest stablecoin issuer, Circle (CRCL), which issues USDC, has faced increased scrutiny. The firm has faced criticism for what some describe as a lack of similarly prompt actions. 

The issue was highlighted after the Drift Protocol hack in early April, when reports alleged that in several widely documented thefts and hacks, the issuer either delayed freezing responses or did not freeze funds at all—allowing attackers to move large sums across blockchains and convert them into other assets.

That controversy is now tied to legal action. NewsBTC reported last week that Circle is facing a fresh lawsuit in Massachusetts connected to the $280 million Drift Protocol hack. 

The complaint alleges that Circle did not freeze stolen funds even though it allegedly had both the technical capability and contractual authority to do so. 

The allegations include that attackers were able to offload up to $230 million onto the Ethereum blockchain by leveraging Circle’s Cross-Chain Transfer Protocol (CCTP), according to the lawsuit’s framing. 

Plaintiffs say this ability to transfer stablecoin-related assets during the period when funds were being moved is central to why they believe Circle should have prevented the transfers.

While Circle faces accusations over the Drift incident, Tether announced a strategic collaboration with the Drift Protocol. Tether said the effort is intended to support user recovery and help relaunch the Drift platform. 

The collaboration, Tether said, creates a structured recovery plan supported by up to nearly $150 million in combined backing, including up to $127.5 million from the company.

Featured image from OpenArt, chart from TradingView.com