Tether Froze $3.3B in Illicit Funds While Circle Froze $109M, Report Finds

New findings from blockchain intelligence firm AMLBot reveal a sharp contrast in how the world’s two dominant dollar-pegged stablecoins respond when illicit activity is detected. While both issuers comply with authorities, the way they intervene – and how aggressively – could not be more different.

Over the past two years, the gap between the two approaches has widened dramatically. Tether, issuer of USDT, has actively intervened in billions of dollars’ worth of transactions linked to criminal activity. Circle, which manages USDC, has taken action on a much smaller scale, intervening only when legally compelled to do so.

AMLBot’s data shows that Tether froze more than $3 billion worth of USDT between 2023 and 2025, while Circle froze just over $100 million during the same period. The difference reflects not market share alone, but fundamentally different enforcement philosophies.

Tether acts early and decisively

Tether’s model is built around rapid response. The issuer routinely blacklists wallets across multiple blockchains when suspicious activity is detected, often before cases reach courtrooms. Thousands of addresses have been restricted, with a significant share of the action coordinated directly with US law enforcement agencies.

One notable feature of Tether’s system is its technical flexibility. In certain cases involving scams or large-scale fraud, frozen USDT has been permanently destroyed and replaced with newly issued tokens, allowing recovered value to be redirected to victims or authorities. This mechanism has been used repeatedly in recent enforcement operations.

Network data also shows that much of this activity has concentrated on high-throughput chains such as Tron, where low fees and fast settlement make stablecoins attractive for both legitimate transfers and illicit flows.

Circle keeps a tighter legal perimeter

Circle’s approach is almost the mirror image. Rather than acting proactively, the company freezes USDC only after receiving formal legal instructions, such as court orders, sanctions listings, or regulatory directives.

Once an address is frozen, the tokens remain immobile until legal clearance is granted. Circle does not burn tokens, reissue replacements, or intervene beyond the scope of explicit mandates. AMLBot describes this model as deliberately conservative, prioritizing procedural safeguards and legal certainty over speed.

Power, control, and user trust

These contrasting strategies highlight a broader debate in crypto finance. Tether’s hands-on enforcement has proven effective at stopping funds from moving deeper into laundering networks, but it also raises questions about centralized authority and discretionary power.

Circle’s slower, rule-bound approach reduces the risk of unilateral action but can limit responsiveness in fast-moving investigations. Supporters argue it offers stronger user protections, while critics say it sacrifices effectiveness.

Stablecoins meet real-world law enforcement

AMLBot’s report illustrates how stablecoins are no longer just blockchain tools – they are financial instruments operating under real-world legal pressure. As regulators increase scrutiny, the divergence between proactive and reactive enforcement models may become even more significant.

In the end, the stablecoin market is not governed by a single rulebook. Instead, it reflects a spectrum of choices about speed, control, and accountability – choices that increasingly shape how digital dollars function in practice, not just in theory.

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