Tether, the organization behind the widely-used stablecoin USDT, has taken a proactive stance in compliance with United States sanctions.
The company recently announced the freezing of 161 Ethereum wallets, a move that aligns with the U.S. Office of Foreign Asset Controls (OFAC) list of sanctioned individuals.
Tether Takes Proactive Stance in Compliance with US Sanctions
Tether, in its announcement, described its decision as a self-initiated action aimed at preemptively averting possible misuse of its tokens and boosting security. The company also stated that it would freeze current and future wallets listed by the OFAC.
This policy marks one of the first major initiatives undertaken by Paolo Ardoino, who recently transitioned from CTO to CEO of the company. In the press release, Ardoino applauded the policy as a step towards strengthening Tether’s collaboration with international regulatory and law enforcement agencies.
The freeze affected 161 Ethereum wallets, but it is important to note that 150 of them did not hold any USDT at the time. Among the 11 wallets containing USDT, there is an uneven distribution of tokens.
Two addresses contain approximately 20,000 tokens each, while a third holds nearly 60,000. The remaining wallets have significantly lower amounts, with one holding 16 cents in USDT.
According to data from Etherscan, a blockchain analytics platform, this enforcement action has led to the freezing of over 3.5 million USDT tokens. The majority of these tokens, approximately 3.4 million, are held by a single address.
This particular wallet has been linked by blockchain investigator ZachXBT to a recent hacking incident involving the betting platform Stake that resulted in the online crypto casino losing around $41 million from its hot wallets.
Wallet with 3.5m USDT and hundreds of txes in last few days just got blacklisted. pic.twitter.com/A3ZnPe7L2X
— Spreek (@spreekaway) December 9, 2023
This wallet also exhibited activity just before Tether’s enforcement action, with hundreds of transactions recorded in the preceding week.
Tether’s Freeze Exposes Mysterious Transactions
A closer look at the transactions reveals intriguing details. Just a day before the freeze, one of the impacted wallets engaged in significant token movement, routing over 400,000 USDT through two other wallets from THORChain.
These transactions have made the trail of funds more complex and have raised questions as the two intermediary wallets were not frozen by Tether.
The scope of Tether’s actions extends beyond the Ethereum mainnet. Investigations into Layer 2 networks on Ethereum, such as Polygon, revealed two wallets with USDT holdings, although the combined total was just over 10,000 tokens.
Further searches on other networks like Arbitrum and Optimism did not show any wallets with USDT balances under the sanctioned addresses.
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