Tether freezes $5.2 million in USDT linked to phishing scams

As a researcher with experience in the crypto industry, I believe that Tether’s decision to freeze USDT worth $5.2 million linked to phishing scams is a commendable action taken by the stablecoin issuer to prevent further illicit activities and protect its users. The fact that these addresses have been used for money laundering from phishing scams, as reported by Slomist’s chief security officer, highlights the importance of monitoring on-chain activity and taking swift action when necessary.

On May 14, I came across information that Tether, the stablecoin issuer, had taken action to prevent access to approximately $5.2 million in USDT (Tether’s stablecoin) stored in twelve Ethereum wallets. These wallets were identified as “USDT Banned Addresses” due to their involvement in phishing scams.

The chief security officer at on-chain analysis firm Slomist stated that certain cryptocurrency addresses were involved in cleaning up ill-gotten gains from phishing schemes, providing no additional details.

As a financial analyst, I’d rephrase that as: Tether, the leading stablecoin provider, has prevented over $1.3 billion from being used after identifying hacks, exploits, and fraudulent activities since our inception. In a recent post on Reddit, our CEO, Paolo Ardoino, disclosed this information, adding that around $1.6 million of these funds were linked to suspected terrorist financing.

In January 2022, Tether identified and blocked three Ethereum accounts holding over $150 million in USDT from its system. In October 2022, Tether prevented access to $8.2 million worth of USDT on Ethereum and added an additional 215 Ethereum-held USDT addresses to its restricted list.

As a crypto investor looking back on events, I recall that towards the end of 2022, Tether, the stablecoin issuer, took action to freeze over $360 million in assets. Fast forward to October 2023, when they froze approximately $817,000 worth of USDT linked to suspicious transactions involving terrorist activities in Ukraine and Israel. The following month, they took additional steps to freeze around $225 million in USDT tied to romance scammers’ ill-gotten gains.

As a financial analyst, I’ve had the opportunity to work with a leading stablecoin issuer that has built strong relationships with over 24 law enforcement agencies spanning across more than 40 countries. In the past year alone, we’ve addressed 198 requests from these agencies to restrict wallets or take other necessary actions in response to their investigations. Over the course of the last three years, that number has risen to 339 such requests.

Tether implemented secondary market restrictions to halt transactions involving individuals or entities on the OFAC SDN list, which is maintained by the United States Office of Foreign Assets Control. This list includes not only sanctioned persons but also organizations under the control or ownership of sanctioned countries.

As a cryptocurrency investor, I can tell you that the implementation of decentralized ledger technology is a game-changer for crypto firms. This technological innovation enables us to trace transactions on the blockchain in real-time, ensuring greater transparency and security. On the other hand, stablecoins, which are an essential part of our crypto ecosystem, have a centralized issuing structure. Consequently, when law enforcement agencies request it, these issuers can freeze assets linked to illicit activities, adding another layer of safety to our investments.

CryptoMoon attempted to contact Tether for clarification regarding the identified suspended addresses and any associated phishing schemes, yet received no reply prior to their deadline.

2024-05-14 11:52

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