Tether freezes $344M USDT at US law enforcement request, sparking debate

Tether froze over $340M in USDT at the request of U.S. law enforcement. The move reignited the debate over when stablecoin issuers should intervene.

Tether said two wallet addresses were frozen and tied to unlawful activity, without naming the parties. The firm cited its policy to act on credible links to sanctions or crime and worked with the U.S. Treasury’s OFAC. Company statement: “When credible links to sanctioned entities or criminal networks are identified, we act immediately and decisively,” said CEO Paolo Ardoino.

Pushback followed. Media outlet TFTC wrote, “Your stablecoins are not your stablecoins. They never were.” Post here.

The dispute escalated after April’s $280M Drift Protocol exploit. Chainalysis detailed the attack’s scale. Onchain analyst ZachXBT said the exploiter bridged 232M+ USDC from Solana to Ethereum across 100+ transactions over six hours, impacting 10+ Solana DeFi protocols. Thread.

He criticized Circle for not freezing funds mid-attack. “No USDC was frozen,” he noted, urging faster action by centralized issuers. Post here.

Key points for investors:
- Tether froze over $340M in USDT in coordination with OFAC Source.
- Two addresses were targeted; Tether cited ties to illegal activity Source.
- The Drift exploit drained $280M; 232M+ USDC was bridged via CCTP over six hours Chainalysis, ZachXBT.
- Circle faced criticism for not freezing USDC during the incident Source.