Tether Has Frozen $4.2 Billion in Illicit USDT – More Than 80% of It Since 2023

Tether reached a cumulative milestone in its cooperation with global law enforcement this week, confirming that approximately $4.2 billion in USDT has been frozen across illicit activity cases to date, with $3.5 billion of that total immobilized since the start of 2023 as the pace of enforcement actions has accelerated sharply.

The Latest Action

The most recent freeze came this week in coordination with the U.S. Department of Justice and Homeland Security Investigations. Investigators traced approximately $61 million in USDT across multiple wallets connected to international pig-butchering fraud operations, following the funds through a chain of money laundering addresses before Tether remotely blacklisted them, rendering the tokens permanently unusable.

Pig-butchering schemes involve prolonged social engineering, where fraudsters build fake romantic or personal relationships with targets over weeks or months before directing them into fraudulent cryptocurrency investment platforms. The $61 million freeze represents one of the larger single-action amounts tied specifically to this fraud category, which law enforcement agencies across multiple jurisdictions have identified as one of the fastest-growing vectors of crypto-related financial crime.

The Infrastructure Behind the Freezes

Tether’s ability to act on law enforcement requests rests on administrative keys embedded in its smart contracts across blockchains including Ethereum and TRON. When a wallet address is formally flagged, Tether can remotely blacklist it, freezing any USDT held there regardless of where the wallet is located or who controls the private keys. The token does not move. It simply stops being usable.

That capability, applied at scale, has produced a growing record. More than 7,200 wallet addresses have been blacklisted to date. Tether now maintains active cooperation relationships with over 300 law enforcement agencies across 60 jurisdictions.

The January 2026 action illustrated what that infrastructure looks like at full deployment. In coordination with the FBI and DOJ, Tether froze $182 million across five wallets on the TRON blockchain in a single day, one of the largest single-day freezes the company has executed.

The Numbers in Context

The $4.2 billion cumulative figure sits against a circulating USDT supply of approximately $183.7 billion as of late February 2026. Frozen assets represent a fraction of the total supply, but the acceleration in enforcement activity since 2023 is the more meaningful data point. More than 80% of all USDT ever frozen was immobilized in a period of roughly two years, which reflects both the growth of illicit activity on stablecoin rails and the maturation of Tether’s compliance infrastructure to respond to it.

The pattern also reflects a broader shift in how law enforcement agencies are approaching stablecoin issuers. Rather than treating them as peripheral actors in financial crime cases, agencies including the DOJ, FBI, and HSI are now incorporating Tether’s freezing capability directly into investigative workflows, using on-chain tracing to follow funds and coordinating with Tether to immobilize them before they can be moved to less traceable assets.

What It Signals

A stablecoin issuer with $183.7 billion in circulating supply, cooperative relationships with 300 law enforcement agencies, and the technical capability to freeze any wallet on demand represents a compliance posture that sits closer to a regulated financial institution than to the decentralized infrastructure crypto was originally built around.

Whether that represents a feature or a design tension depends on the perspective. What the $4.2 billion figure confirms is that the capability is real, increasingly used, and growing faster than at any point in Tether’s history.

The post Tether Has Frozen $4.2 Billion in Illicit USDT – More Than 80% of It Since 2023 appeared first on ETHNews.