Tether (USDT), the world’s largest stablecoin issuer, has frozen a series of wallets associated with individuals on the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctions list. Tether described this action as a voluntary measure to prevent USDT abuse and enhance security.
USDT issuer Tether proactively froze 41 wallets on Saturday linked to people on the U.S. Treasury Department's OFAC list of Specially Designated Nationals, several of which addresses had been using Tornado Cash. Tether says this is a new voluntary wallet freeze policy with extra…— Wu Blockchain (@WuBlockchain) December 10, 2023
Etherscan data reveals that Tether froze 161 Ethereum wallets yesterday, but 150 of them currently have no USDT tokens. It’s uncertain if these wallets ever held USDT or how many they had.
The remaining 11 wallets possess over 3.5 million USDT, with a single address holding 3.4 million. Investigator ZachXBT linked this address to the recent Stake betting platform hack. This wallet was active shortly before the freeze, conducting numerous transactions in the past week.
Wallet for an OTC or service that just received bunch of funds from Stake hack https://t.co/vYQ5ZDqGsM— ZachXBT (@zachxbt) December 9, 2023
Among the wallets with USDT, two hold around 20,000 tokens each, and a third holds nearly 60,000. Others contain smaller amounts, with one having just 16 cents in frozen USDT. Two days before the freeze, this last wallet moved over 400,000 USDT received from THORChain through two other wallets, making tracking challenging. Tether has not frozen these two wallets.
These wallets may hold USDT on different chains, including Ethereum Layer 2 networks. A Polygon can search found two wallets with USDT on Polygon, totaling just over 10,000 tokens, and one also holds USDT on Ethereum’s mainnet. A search on Arbitrum and Optimism for sanctioned wallets with USDT balances yielded no results.
Tether has stopped certain wallets before because they were doing bad stuff. Back in October 2023, they froze 32 wallets connected to terrorism and the Ukraine-Israel war. They also took away $225 million linked to a group involved in human trafficking after the U.S. Department of Justice looked into it.