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- Tether froze Ethereum wallets associated with blacklisted users to increase security and prevent misuse.
- The business partnered with regulators, expanded sanctions control to the secondary market, and unveiled a new security policy.
Tether, the issuer of the world’s largest stablecoin, USDT, has frozen wallets associated with individuals on the United States Office of Foreign Asset Controls (OFAC) list of sanctioned individuals.
Tether Introduces New Policy to Strengthen Ecosystem Security
Read more ⬇️https://t.co/kCCFhLflfb
— Tether (@Tether_to) December 9, 2023
Wallet Freezing: A Preemptive Security Measure
Tether decided to freeze wallets connected to people who have received OFAC sanctions because it wants to improve security and proactively stop any possible Tether token misuse. Etherscan access to the company’s blockchain data shows that 161 Ethereum wallets were frozen. It’s important to remember that 150 of these wallets did not have any USDT tokens at the time, which raises questions regarding their prior history with USDT and related actions.
Among the remaining 11 wallets, there were 3.5 million USDT tokens, with the majority concentrated in a single address. This address piqued interest due to its association with a recent hacking incident involving the Stake betting site. This raises concerns over transaction trails and previous token ownership.
There were roughly 20,000 tokens in each of the first two wallets and almost 60,000 in the third. The remaining ones held smaller sums; a wallet had 16 cents’ worth of USDT that Tether had blocked. Remarkably, a few days before the freeze, one wallet had moved more than 400,000 USDT from THORChain through two more wallets. But Tether’s freezing policy did not apply to the routing wallets utilized in this transaction.
Expanding Policy Horizons: Tether’s Bid for Enhanced Cooperation
Tether’s decision to expand its control over sanctions to the secondary market is an important step. Its policy of freezing wallets was previously limited to its platform. This extension aims to guarantee stablecoin usage safely and work with government bodies more efficiently. CEO Paolo Ardoino has emphasized the company’s dedication to strengthening security procedures by characterizing this action as a precaution against USDT misuse.
While Tether takes this step based on a security-driven strategy, it brings important concerns regarding token ownership and transaction histories to the forefront. Tether plans to freeze Specially Designated Nationals (SDN) addresses, both current and prospective.
Mystery USDT Transaction: Tether’s High-Profile Fund Transfer
Separately, on December 8, the Tether Treasury moved $60 million worth of USDT to an unidentified “mysterious fund/institution” that garnered much attention. The blockchain analytics company Lookonchain made this finding public by revealing that Tether had sent $1.76 billion USDT to this fund/institution since October 20. They also later distributed these monies to different exchangers.
The attention-grabbing magnitude of these transactions highlights Tether’s crucial position in the cryptocurrency ecosystem. The ramifications of such transfers are significant, as USDT continues to exhibit exceptional performance in 2023, with a market worth of $90 billion and over 70% dominance in the stablecoin market.
Community Reactions
The cryptocurrency community has responded differently to Tether’s proactive security approach. Some see it as a step in the right direction that might help stablecoins be widely adopted and better regulated. This action aligns with continuous attempts to resolve regulatory issues and strengthen the acceptance of cryptocurrencies in the financial system.
Breaking: @Tether_to public statement to comply with regulators demand to have freezable wallets for security. This is bullish meaning @Tether_to and the US government are working together, this will bring in the US Stable Coin Act and global adoption.#Tether#USDT… pic.twitter.com/E0eCC1skxf
— MartyParty (@martypartymusic) December 9, 2023
As of the time of writing, USDT is trading at $0.9999 with a 24-hour decrease of 0.02%. Notably, in the last 24 hours, its volume has increased by 27.97%.
