Tether freezes OFAC-listed wallets under new policy

Tether, the issuer of the world’s largest stablecoin, is freezing the wallets of individuals sanctioned by the U.S. Office of Foreign Asset Controls (OFAC). The company said the move marks a proactive approach in preventing potential misuse of its tokens and enhancing security measures.

Tether stated that it would not only freeze existing wallets on the OFAC list but also any new wallets added in the future. In the press release, Ardoino lauded this policy shift as an expansion of Tether’s collaboration with global law enforcement and regulatory bodies.

“This strategic decision aligns with our unwavering commitment to maintaining the highest standards of safety for our global ecosystem and expanding our close working relationship with global law enforcement and regulators” stated Paolo Ardoino, CEO of Tether. “By executing voluntary wallet address freezing of new additions to the SDN List and freezing previously added addresses, we will be able to further strengthen the positive usage of stablecoin technology and promote a safer stablecoin ecosystem for all users.”

Tether’s history with freezing funds has been focused primarily on unlawful activities, but the company was reluctant to freeze wallets interacting with the sanctioned protocol Tornado Cash. They cited the lack of formal requests from U.S. law enforcement as a reason. However, following the latest announcement, blockchain records indicate that Tether has blacklisted Tornado Cash’s contract addresses.

The move could set a precedent for other stablecoin operators and crypto platforms regarding their response to international sanctions and regulatory compliance.

Earlier this month, Tether blacklisted over 30 cryptocurrency addresses that have received billions of USDT.

The blacklisted addresses had received a total of $161 million from Whitebit, a European cryptocurrency exchange with Ukrainian roots. Many of these addresses were involved in the movement of STUSDT, a token that users receive after staking USDT.

Chainargos had previously identified a large number of wallets engaged in “programmatic spamming” operations involving small transactions of STUSDT, which it observed in August.

On December 1, Tether froze 28 of these addresses, and on December 2, an additional six addresses were blacklisted after moving more than $10 million, with assets worth roughly $1 million. The frozen wallets were often linked to STUSDT movements.

Tether has not provided specific reasons for these actions, but the stablecoin company has been cooperating with the U.S. Department of Justice (DOJ) in freezing funds linked to illegal activities. In November, Tether voluntarily froze $225 million associated with human trafficking groups in Southeast Asia, calling it the “largest-ever freeze of USDT.”