U.Today - Tether has approximately 225 million USDT tokens in collaboration with OKX and the U.S. Department of Justice (DOJ).
This move is a result of an investigation into an international human trafficking syndicate linked to a "pig butchering" romance scam in Southeast Asia. It marks the largest freeze of USDT in the company's history.
The collaborative effort, which involved advanced blockchain analysis tools provided by Chainalysis, highlights the increasing role of cryptocurrency firms in aiding law enforcement in tracking and halting illegal activities.
What will happen to the frozen funds?
As by CEO Paolo Ardoino, the initial step involves allowing law enforcement agencies to continue their investigations. During this period, the frozen funds remain inactive but are still accounted for as liabilities against Tether's reserves.The primary goal of freezing funds, particularly those linked to criminal activities, is to eventually aid in returning stolen assets to the victims.
Once law enforcement deems it appropriate and the investigation reaches a resolution, the standard procedure involves the burning (permanent removal) of the frozen USDT and the issuance of new tokens.
This action is taken to ensure the integrity of the Tether ecosystem and to uphold trust in the stablecoin's value and circulation.
Balancing decentralization and security
The ability to freeze digital assets like USDT is a critical tool for cryptocurrency issuers in combating illicit activities. In scenarios such as theft, fraud, or ties to criminal activities, issuers can immobilize these assets in order to prevent their movement or exchange.Tether has frozen funds linked to hacking incidents on various occasions. For instance, in 2020, Tether froze millions of dollars worth of USDT following a hack on the cryptocurrency exchange . In certain cases, Tether has frozen funds following court orders or legal requests.