Tether has frozen $435 million in USDT for the U.S. Department of Justice, the FBI, and the Secret Service

The world’s largest stablecoin issuer has frozen 326 wallets containing $435 million worth of Tether (USDT) for U.S. authorities, according to a December 15 letter from the company. Assets are frozen to assist law enforcement agencies, including the U.S. Department of Justice (DOJ), the Federal Bureau of Investigation (FBI), and the Secret Service.

The letter was addressed to Senator Cynthia M. Lummis and Congressman J. French Hill, and was followed by another Nov. 16 letter to politicians, both in response to Lummis and Hill’s Oct. 26 letter to Attorney General Merrick Garland outlining their concerns about the use of stablecoins for illegal activities such as money laundering and terrorist financing.

In making the two letters public, Tether CEO Paolo Ardoino noted that the company’s goal is to become a “world-class partner” to the U.S. to “expand dollar hegemony on a global scale.” ”

Tether is committed to preventing illegal use of USDT

In its latest letter, Tether highlighted that it implemented a “wallet freeze policy” on December 1 to assist law enforcement agencies in combating the illegal use of stablecoins. Tether called it a “historic milestone” and said the “direct and impactful” policy involves freezing all wallets on the Office of Foreign Assets Control (OFAC) list of Specially Designated Nationals (SDN).

Tether noted:

"By expanding the scope of sanctions controls to the secondary market, we have set a precedent in the industry, leading the industry with foresight and vigilance. ”

Tether added that it recently incorporated the Secret Service into its platform and is currently working to include the FBI. The stablecoin issuer also helps the Department of Justice “stop bad actors and help victims recover.”

In a 4-page letter in November, Tether listed all of its ongoing efforts to prevent USDT from being used for malicious purposes. This includes developing a “robust” Know Your Customer (KYC) and anti-money laundering (AML) program, which is comparable to that of “sophisticated financial institutions,” the letter said.

Tether’s KYC/AML program was also subject to a Title 31 review conducted by the Internal Revenue Service (IRS) on behalf of the Financial Crimes Enforcement Network (FinCEN). Tether is registered with FinCEN as a money services business.

Tether says it works with third-party services such as Chainaanalysis and WorldCheck to conduct due diligence and background checks on potential customers. The company also uses these services to conduct ongoing news and information checks with existing customers to ensure that the information is up to date, the letter said.

Tether emphasizes that its thousands of customers mainly consist of certified individuals, trading companies, and institutions. Due to the limited number of customers, Tether conducts “more thorough due diligence” on all customers than the millions of customers handled by some crypto exchanges.

In addition, stablecoin issuers are partnering with Chainaanalysis to ensure comprehensive independent analysis of USDT transactions on major blockchains and explore more real-time monitoring capabilities.

In addition, Tether says it uses Chainaanalysis’ Reactor Tool, which is used by multiple government agencies, to monitor transactions and identify high-risk or suspicious activity. For example, transactions involving mixers or sanctioned wallets are flagged as high risk.

Extensive cooperation with law enforcement agencies worldwide

According to the November letter, Tether has worked with 19 jurisdictions around the world to assist with ongoing investigations, in some cases proactively providing information to law enforcement.

According to the letter, Tether has frozen 800 million USDT in secondary market addresses, which are mostly related to hacking and theft. The company said it helped the Justice Department fulfill 68 different requests by freezing 188 wallets holding 70 million USDT.

Tether has partnered with NBCTF, Israel’s counterterrorism financing agency, to identify and freeze wallets linked to Hamas and other terrorist groups. Tether said its relationship with NBCTF began before the October attack and will continue to work with the agency to prevent the illegal use of USDT.