Tether freezes the tokens of people who are on the OFAC sanctions list – here are the details

Tether (USDT), the company behind the world’s largest stablecoin, has blocked the wallets of people who have been defrauded by the U.S. Office of Foreign Asset Controls (OFAC) were sanctioned.

In a recent announcement, the company stated that it wants to prevent potential misuse of its tokens and improve security measures by engaging with with global law enforcement and regulatory authorities.

“This strategic decision is consistent with our unwavering commitment to maintaining the highest security standards for our global ecosystem and expanding our close collaboration with global law enforcement and regulators,” said Paolo Ardoino, CEO of Tether.

“By voluntarily freezing wallet addresses of new additions to the SDN list and freezing addresses already added, we can further strengthen the positive use of stablecoin technology and promote a safer stablecoin ecosystem for all users.”

While Tether has previously frozen funds linked to illegal activities, the company has been hesitant to freeze wallets that interact with the sanctioned protocol Tornado Cash.

Tether claimed that it had not received a request to do so from US law enforcement.

However, following the recent announcement, blockchain records show that Tether has blacklisted Tornado Cash contract addresses.

Only 11 of the sanctioned addresses hold USDT

According to Blockchain data, Tether has frozen a total of 161 Ethereum wallets, with 150 of these wallets currently containing no USDT tokens. It remains unclear whether these wallets previously held USDT tokens or whether they were ever involved in related activities. There are over 3.5 million USDT tokens in the remaining 11 wallets, with the majority of this concentrated in a single address with 3.4 million tokens. Of the wallets holding USDT tokens, two addresses contain around 20,000 tokens each, while another contains almost 60,000 tokens. The remaining wallets contain smaller amounts, with one wallet only containing 16 cents of frozen USDT.

Two days before the freeze, this wallet transferred more than 400,000 USDT from THORChain to two other wallets, making it difficult to trace the funds. Interestingly, none of the wallets used for the transaction were frozen by Tether. It is worth noting that the wallets can hold USDT tokens on various chains, including Ethereum Layer 2 networks.

A search on Polygonscan revealed two wallets holding USDT tokens on Polygon, with the total number of tokens being just over 10,000 and one wallet also holding USDT on the Ethereum mainnet. A similar search on Arbitrum and Optimism did not reveal any wallets with USDT balances on the sanctions list.

Tether’s Bitcoin bet is starting to pay off

In May 2023, Tether announced its plans to permanently invest up to 15% of net realized profits in Bitcoin. By holding BTC and other assets, Tether aims to protect its reserves from loss of purchasing power during prolonged downturns in the cryptocurrency market. Thanks to the recent price surge, Tether’s Bitcoin holdings have increased by 85% or 1.1 billion USD since its acquisition.

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Margharet Tess

Editor, Developer at Cryptheory Labs

I have been active in the cryptocurrency world for over 6 years, during which I have written countless articles about this sector. What fascinates me most about cryptocurrencies is their technological aspect and the problems they aim to solve. In the past three years, I have ventured into app development and am currently working on a larger project called P2E Buzzer. Stay tuned for the surprise. 🙂 My previous experiences: Business2Community.com, TradingPlatforms.com

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