Tether has frozen about $4.2 billion in USDT linked to suspected criminal activity over the past three years. Most of the blocked funds were restricted after 2023 as regulators and law enforcement stepped up pressure on crypto fraud and sanctions evasion. The amount equals about 2.3% of USDT’s supply, a notable figure for the largest stablecoin in the market.
Reuters reported Friday, 27 February 2026, that Tether disclosed the scale of the freezes. The company can block tokens on-chain by blacklisting wallet addresses when authorities make formal requests. That power has made USDT a major tool in both crypto payments and enforcement action.
On Tuesday, 23 February 2026, Tether said it helped the US Department of Justice seize nearly US$61 million in USDT tied to pig-butchering scams. In those cases, fraudsters build trust with victims before convincing them to send money. Earlier this month, Tether also froze about $544 million in crypto at the request of Turkish authorities in a case tied to alleged illegal betting and money laundering.
Tether said it now works with more than 310 law enforcement agencies across 64 countries. The company said those partnerships help track, freeze, and seize illicit funds across borders. In one related case, a Department of Justice release thanked Tether for assisting with the transfer of seized assets.
The company also pointed to several cases in 2025 involving terrorism financing, money laundering, pig-butchering scams, a sanctioned exchange, and a transnational scam network. These cases show how often stablecoin issuers now sit at the center of cross-border financial investigations. They also show how quickly authorities can act when issuers cooperate.
Tether CEO Paolo Ardoino said the company supports law enforcement efforts to freeze illicit assets and protect victims. He added that blockchain tools can help authorities move faster against criminal activity. Tether said it remains focused on keeping USDT usable for global commerce while responding to enforcement requests.
USDT remains the largest stablecoin in circulation, with more than $180 billion outstanding. That figure has climbed sharply from about $70 billion three years ago. As supply has grown, USDT has become a core source of liquidity across centralized and decentralized trading venues.
Blockchain analytics firm Elliptic said that by late 2025, Tether and Circle had blacklisted about 5,700 active wallets holding around $2.5 billion. Roughly three-quarters of those addresses held USDT when issuers froze them. The data points to a broad rise in blacklisting activity across the stablecoin sector.
Analysts estimate that when stablecoin supply contracts, crypto trading volumes can drop by 10% to 20% over several weeks. Past periods of shrinking supply have also lined up with sharper volatility in Bitcoin and altcoins. Because USDT plays such a large role in market liquidity, large-scale freezes can carry effects beyond the wallets directly involved.
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The growing use of wallet blacklists has renewed debate around centralization in major stablecoins. Issuers must balance compliance demands with the decentralization ideals that helped drive crypto adoption. That tension has become harder to ignore as enforcement actions expand.
This month, reports also linked Stripe’s stablecoin push to early friction after its newly acquired startup Bridge became tied to transactions allegedly involving scammers and sanctioned entities. In September, Circle said it was exploring ways to reverse stablecoin transfers in fraud and dispute cases. Circle President Heath Tarbert said such refund tools could help stablecoins move further into mainstream use.
As the market absorbs tighter controls, USDT remains central to both liquidity and compliance. Its size gives Tether unusual influence over how enforcement works in crypto. The question now is whether stablecoins can keep growing while that control becomes more visible.
Tether has frozen $4.2 billion in USDT tied to suspected criminal activity over three years as global enforcement efforts expanded. The action shows how deeply stablecoins now sit within financial investigations. As scrutiny grows, the market will keep watching how Tether balances compliance, liquidity, and control.