Tether Froze Nearly $350 million in Coordination With U.S. Authorities

Tether said it froze $344 million in USDT tied to illicit activity after coordination with U.S. law enforcement, according to a recent company statement. The action involved two wallet addresses flagged for suspected criminal use, with authorities requesting immediate intervention.

The disclosure came as regulators and blockchain investigators increased scrutiny on stablecoins following a series of large-scale DeFi exploits in 2026. Tether framed the move as part of its broader compliance model, emphasizing its ability to act quickly when illicit flows are identified.

Tether Freezes $344 Million in USDT With U.S. Authorities

In its official statement, Tether said it coordinated with U.S. law enforcement agencies to freeze $344 million in USDT held across two addresses linked to illicit activity. The firm did not disclose the specific case or entities involved.

The company stated that enforcement actions now form a routine part of its operations, with monitoring systems flagging suspicious wallets tied to sanctions evasion, fraud, or organized crime. Once identified, Tether said it can block transactions and freeze assets directly at the smart contract level.

The process aligns with guidance from the Office of Foreign Assets Control, particularly its Specially Designated Nationals list, which identifies individuals and entities subject to financial restrictions.

Tether reported that it has worked with more than 340 law enforcement agencies across 65 jurisdictions. These collaborations contributed to over 2,300 cases, resulting in the freezing of more than $4.4 billion in USDT.

U.S. authorities accounted for a large share of these actions, with more than 1,200 cases and approximately $2.1 billion in frozen funds.

Chief executive Paolo Ardoino said the firm responds quickly once a wallet is linked to illicit activity. He added that delays in enforcement could expose users and financial systems to further risk.

Tether Positions USDT as Safer for DeFi

Meanwhile, Tether’s announcement builds on the stablecoin issuer’s courtship of decentralized finance protocols. Following recent DeFi exploits, Tether’s biggest competitor, Circle, has come under fire for being slow to freeze USDC stolen funds.

The criticisms reached their peak a few weeks ago, following the $285 million hack of Drift Protocol. Pseudonymous blockchain sleuth ZachXBT noted that Circle could have frozen most of the USDC funds but failed to act.

ZachXBT further highlighted 14 other cases in which Circle did not freeze stolen USDC, even as other stablecoin issuers moved quickly to freeze funds.

Tether capitalized on the public scrutiny of Circle to extend $127.5 million in bailout funds to Drift Protocol as part of its recovery plan. In exchange, the Solana-based protocol agreed to use USDT as its primary stablecoin rather than USDC.

With the KelpDAO hack occurring shortly after, DeFi has faced increased scrutiny over its security. However, not everyone supports asset freezing following the Arbitrum decision to claw back about $71 million from the KelpDAO hacker, which has attracted some criticism.