Tether (USDT) is the world's largest stablecoin with over $110 billion in circulation. It's also the most aggressive at freezing funds—with over $1.5 billion in USDT frozen across more than 1,200 addresses. Understanding why Tether freezes funds helps you assess your own risk exposure.
The scale of Tether's freezes
Tether has been blacklisting addresses since 2017, and the pace has accelerated significantly in recent years. Here's what the numbers look like:
The largest single freeze was approximately $225 million linked to a human trafficking syndicate in Southeast Asia. But freezes range from millions to just a few dollars— Tether doesn't discriminate by amount.
Reasons Tether freezes funds
Tether's freezing decisions fall into several categories. Understanding these helps you assess what kinds of activity might put funds at risk.
Law Enforcement Requests
The most common reason. Police agencies worldwide contact Tether when they identify stolen funds or criminal proceeds. Tether cooperates with requests from the US DOJ, FBI, Secret Service, and international agencies.
Sanctions Compliance
Tether freezes addresses linked to OFAC-sanctioned entities, including individuals, companies, and even entire protocols. This includes addresses connected to sanctioned countries like North Korea and Iran.
Hack Recovery
When DeFi protocols or exchanges are hacked, Tether sometimes acts quickly to freeze USDT before hackers can swap or bridge it elsewhere. Speed is critical—freezes often happen within hours of an exploit.
Court Orders
Legal proceedings sometimes result in asset freeze orders that Tether complies with. These can come from civil litigation (disputes between parties) or criminal cases.
How freezing happens
The freezing process is surprisingly quick and happens entirely on-chain:
Request received
Law enforcement, a court, or Tether's compliance team identifies an address to freeze.
Verification
Tether verifies the request is legitimate and comes from an appropriate authority.
Blacklist transaction
Tether calls the addBlackList function on the USDT contract, adding the address.
Immediate effect
The address is instantly unable to send or receive USDT. There is no warning.
No prior notice
Tether does not notify address owners before freezing. The first indication is typically a failed transaction. By design, advance notice would allow bad actors to move funds before the freeze takes effect.
Can frozen funds be recovered?
In rare cases, yes. But the process is difficult:
- Mistaken freezes: If Tether freezes an address in error, they can remove it from the blacklist. This has happened a handful of times.
- Law enforcement release: If authorities determine funds were legitimately owned, they can request Tether unfreeze them. This typically requires proving the funds have no connection to criminal activity.
- Legal challenge: In theory, someone could legally challenge a freeze, but this would require suing Tether in a jurisdiction where they're subject to courts.
In practice, once funds are frozen, the vast majority stay frozen permanently. Tether has never published statistics on unfreezing, but known cases are extremely rare.