Stablecoin issuer Tether has reportedly frozen approximately $4.2 billion worth of its tokens in USD tokens over the past three years over suspected criminal activity.
Most of the blocked funds have been restricted from 2023 as regulators and law enforcement agencies step up scrutiny of cryptocurrency fraud and sanctions evasion, a Salvadoran company reportedly he said Reuters on Friday.
Tether’s USDt (USDT) token is the largest stablecoin in circulation, with more than $180 billion in circulation, up sharply from around $70 billion three years ago.
Tether can freeze tokens directly on the blockchain, blacklisting wallet addresses at the request of authorities.
Related: Tether-backed Oobit adds crypto-bank transfers for local payment networks
Tether helps governments freeze funds
On Tuesday, Tether announced that it had helped the U.S. Department of Justice seize nearly $61 million in tons of dollars related to “pig slaughter” fraud, a scheme in which criminals develop relationships with victims before tricking them into sending money.
Earlier this month, the company also froze approximately $544 million worth of cryptocurrency at the request of Turkish authorities, blocking funds linked to alleged illegal online betting and money laundering.
According to blockchain analytics firm Elliptic, by the end of 2025, stablecoin issuers Tether and Circle on the blacklist approximately 5,700 wallets worth approximately $2.5 billion, with approximately three-quarters of the addresses containing thousands of dollars at the time they were frozen.
Related: Tether USDT Supply Will See Biggest Monthly Decline Since 2022 FTX Crash
USDt supply is falling
USD tons are on track for the biggest monthly supply decline in three years, Cointelegraph reported, with circulating supply falling by about $1.5 billion in February after a $1.2 billion decline in January, blockchain data showed. The decline reflects the period following the collapse of FTX in slow 2022 and may indicate less liquidity in cryptocurrency markets.
Tether said the numbers reflect short-term changes in distribution rather than weakening demand, noting USDC (USDC) also saw multi-billion dollar reductions over the same period.
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