After law enforcement agencies identified illegal activity, Tether froze $85,877 worth of its flagship USDT coin.
The freeze came following a report that a user’s Binance account had been hacked and their USDT was drained. Yet, this specific freeze is relatively minor compared to recent large-scale actions by the firm.
In June, Tether froze $700 million in USDT across 112 wallets after U.S. authorities requested an intervention. To date, Tether claims it has frozen over $2.5 billion in USDT following cooperation with global authorities to identify illicit activity.
Such freezes address one of the most persistent concerns regarding digital assets: their potential misuse for money laundering and fraud.
Key Principles
Tether’s capacity to track transactions and freeze USDT associated with illicit activity distinguishes it from both traditional fiat currencies and decentralized cryptocurrencies like Bitcoin and Ethereum. One of the fundamental principles underpinning these digital assets is their decentralized nature, free from government oversight.
Privacy concerns have long favored stablecoins over central bank digital currencies (CBDCs). Critics of the digital euro argue that it could be used to surveil citizens, a claim contested by the European Central Bank.
Control and Transparency
Interest in CBDCs has diminished across most countries. In the U.S., legislation aimed at prohibiting the Federal Reserve from issuing a CBDC has advanced, even as the nation’s first stablecoin regulations were signed into law.
Meanwhile, concerns about privacy are heightened by stablecoin issuers’ ability to monitor and control their coins. These anxieties will likely intensify with the anticipated entry of new stablecoins to the market, including plans from retailers like Walmart and Amazon, tech giant Meta, and major U.S. banks such as JPMorgan Chase, Bank of America, and Citi.
As these products are launched, questions will continue to arise about how these organizations will enforce stablecoin usage and safeguard users’ data.