Blockchain-enabled platform Tether has frozen approximately USD 4.2 billion in USDT associated with illicit activity, according to reporting by Reuters.
Of that total, roughly USD 3.5 billion has been frozen since 2023, indicating that enforcement activity has accelerated over the past two years. The news comes just two weeks after Tether froze over USD 500 million in digital assets linked to an alleged illegal gambling and money laundering operation in Turkey.
Now, the stablecoin issuer confirmed that it assisted the US Department of Justice in ongoing investigations. Among the most recent actions was the freezing of nearly USD 61 million linked to so-called 'pig-butchering' scams, a form of long-term social engineering fraud in which perpetrators build trust with victims over time before inducing them to transfer funds, typically into fraudulent investment schemes. This category of fraud has increasingly targeted cryptocurrency users across multiple markets.
The scale of the freezes points to a shift in how centralised stablecoin issuers interact with regulatory and law enforcement bodies. Rather than functioning solely as a payment infrastructure, Tether has taken an active role in supporting investigations, including the ability to blacklist wallets and freeze funds at the address level.
This technical capability is specific to centralised stablecoins, where the issuer retains administrative control over token movements. It stands in contrast to decentralised protocols, where no single entity holds equivalent authority.
Despite the volume of frozen assets, USDT's circulating supply has surpassed USD 180 billion, maintaining its position as the largest stablecoin by market capitalisation. The concurrent growth in both adoption and enforcement activity reflects the broader trajectory of digital asset integration into regulated financial markets.
The developments come as regulators in the US and EU continue to advance frameworks governing stablecoin issuance and oversight. For stablecoin operators, increasing collaboration with law enforcement authorities is becoming a defining feature of market participation at scale, rather than an exception.
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