Tether froze $4.2B in tokens tied to illicit activity in 3 years: Report

Stablecoin issuer Tether has reportedly frozen roughly $4.2 billion worth of its USDt tokens connected to suspected criminal activity over the past three years.

Most of the blocked funds were restricted since 2023, as regulators and law enforcement agencies intensified scrutiny of crypto-related fraud and sanctions evasion, the El Salvador-based firm reportedly told Reuters on Friday.

Tether’s dollar-pegged USDt ($USDT) token is the largest stablecoin in circulation, with more than $180 billion outstanding, up sharply from about $70 billion three years ago.

Tether can freeze tokens directly on the blockchain by blacklisting wallet addresses when requested by authorities.

Related: Tether-backed Oobit adds crypto-to-bank transfers for local payment networks

Tether helps governments freeze funds

On Tuesday, Tether announced that it has assisted the US Department of Justice in seizing nearly $61 million in USDt tied to “pig-butchering” scams, a scheme in which criminals build relationships with victims before persuading them to send money.

Earlier this month, the company also froze approximately $544 million in cryptocurrency at the request of Turkish authorities, blocking funds tied to an alleged illegal online betting and money-laundering operation.

According to blockchain analytics firm Elliptic, by late 2025, stablecoin issuers Tether and Circle had blacklisted around 5,700 wallets holding about $2.5 billion, with roughly three-quarters of the addresses containing USDt when they were frozen.

Related: Tether $USDT supply set for biggest monthly decline since 2022 FTX collapse

USDt supply shrinks

As Cointelegraph reported, USDt is on track for its largest monthly supply drop in three years, with circulating supply falling about $1.5 billion in February after a $1.2 billion decline in January, according to blockchain data. The contraction echoes the period following the FTX collapse in late 2022 and may point to tighter liquidity in crypto markets.

USDt market cap drops in past month. Source: CoinMarketCap

Tether said the figures reflect short-term distribution changes rather than weakening demand, noting $USDC ($USDC) also saw a multibillion-dollar reduction during the same period.

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