Tether Freezes 161 Wallets in Compliance with US Sanctions
In a decisive move echoing the spirit of compliance with international regulations, Tether, the pioneering force behind the world’s most significant stablecoin, USDT, has executed the freezing of 161 Ethereum wallets. This action comes in response to the United States’ Office of Foreign Asset Controls (OFAC) sanctions list.
Tether Introduces New Policy to Strengthen Ecosystem Security
Tether framed this action as a proactive step to thwart any potential misuse of its tokens and bolster overall security. This marks one of the first major initiatives undertaken by Paolo Ardoino, who recently transitioned from Chief Technical Officer (CTO) to Chief Executive Officer (CEO). Ardoino hailed this policy as a significant stride towards fortifying Tether’s collaboration with international regulatory and law enforcement agencies.
A Closer Look at the Frozen Wallets
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…
While the number of frozen wallets appears substantial, the distribution of USDT tokens among them is pretty uneven. Out of the 161 wallets, 150 contained no USDT to freeze. It remains uncertain if these wallets had ever held USDT tokens in the past or were involved in transactions concerning the stablecoin.
The crux of the matter lies with the remaining 11 wallets. These wallets hold over 3.5 million USDT tokens, with a single address dominating this figure, holding approximately 3.4 million tokens. Blockchain investigator ZachXBT has linked this address to a recent security breach at the Stake betting platform, where a substantial loss of around $41 million occurred due to a hacking incident.
Wallet with 3.5m USDT and hundreds of txes in last few days just got blacklisted. pic.twitter.com/A3ZnPe7L2X
Notably, this wallet displayed considerable activity shortly before Tether’s enforcement action, engaging in numerous transactions over the preceding week.
Unveiling Intriguing Transactions
A deeper analysis of the transactions unveils some fascinating details. A day before the freeze was enacted, one affected wallet moved over 400,000 USDT through two intermediary wallets from THORChain. What adds complexity to the fund’s trail is that neither intermediary wallet was subject to Tether’s freeze.
Furthermore, the impact 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, albeit with a combined total of just over 10,000 tokens.
However, when extending the search to other networks like Arbitrum and Optimism, no wallets with USDT balances under the sanctioned addresses were found.
A Strategic Step Towards Regulatory Compliance
Tether’s decision to freeze these wallets showcases its commitment to aligning with regulatory standards and upholding the integrity of the USDT stablecoin. By taking proactive measures to adhere to OFAC sanctions, Tether aims to set an example for the industry, demonstrating its dedication to ensuring the security and legitimacy of its digital assets.
