Tether recently froze 161 cryptocurrency wallets on the hotlist of US regulators. However, not all hold their native stablecoin USDT as alleged by the authorities.
Tether’s Announcement
According to the company’s blog post on Saturday, its recent action was a “precautionary measure” to combat illicit activities, particularly those utilizing USDT. Its decision made on December 1 was anchored on the Specially Designated Nationals (SDN) List of the US Office of Foreign Assets Control (OFAC). Besides regulatory compliance, Tether justified the move as part of its continued dedication to ensuring a secure and reliable environment for its users.
“This strategic decision aligns with our unwavering commitment to maintaining the highest standards of safety for our global ecosystem and expanding our close working relationship with global law enforcement and regulators,” said Tether CEO Paolo Ardoino. “By executing voluntary wallet address freezing of new additions to the SDN List and freezing previously added addresses, we will be able to further strengthen the positive usage of stablecoin technology and promote a safer stablecoin ecosystem for all users.”
Not All Blocked Wallets Contain USDT
An independent investigation conducted via Etherscan reveals that there were 161 wallets frozen by Tether. One hundred fifty of them didn’t hold any USDT though, and it’s unclear whether or not they even held the digital asset at some point. Meanwhile, the remaining 11 have a combined 3.5 million USDT. Out of these, a single wallet held all 3.4 million USDT while the rest were distributed on some of the remaining 10.
Cryptocurrency sleuth ZachXBT claimed that the single address with multi-million funds is linked to over-the-counter (OTC) trading services processing over a hundred transactions a week before the freeze. The pseudonymous investigator traced them back to the Stake hacking incident allegedly orchestrated by the Lazarus Group, a Democratic People’s Republic of Korea (DPRK) supported outfit.
In a related report from The Block, some wallets held denominations ranging from 20,000 to 60,000 USDT. Others were nearly depleted with one only having a balance of 16 cents. However, the latter was detected to have moved over 400,000 USDT to THORChain before it was blocked. The transaction histories of the rest were hard to trace already.
Compliance to Regulators
Tether is no longer a stranger to playing ball so it will not get in trouble with regulators. In response to the Israel-Palestine conflict, it worked together with Israel’s National Bureau for Counter-Terror Financing (NBCTF) to block 32 wallets connected to terrorist funding.
As shown in the Binance lawsuit, US regulators are serious when it comes to the crackdown on terrorist financing using cryptocurrencies. One of the cases filed against the crypto exchange was failure to abide by US sanction laws after it allegedly processed 1.1 million transactions with around $898.6 million linked to Iran.