Crypto giant Tether, behind the third-ranked digital currency USDT by market capitalization, confirmed freezing $225 million worth of the stablecoin. The funds are alleged to belong to a syndicate involved in human trafficking, as per the US Department of Justice (DoJ).
Tether Freezes Million-Dollar Linked to Human Trafficking
Tether froze the funds following the investigation conducted by blockchain analyst firm Chainalysis. In a Monday, November 20 blog post, the USDT stablecoin issuer explained that the grounds for freezing the crypto are informed by the need to assist the Justice Department.
Tether disclosed that several self-custody digital wallets holding USDT valued at $225 million were linked to the human trafficking syndicate within Southeast Asia.
The detailed analysis from the blockchain analyst firm indicated that the criminals were orchestrating the pig butchering scam. The scheme involves creating fake profiles on social media as a channel leveraged to con unsuspecting individuals to send money into a bogus investment opportunity.
Tether and OKX Tap Chainalysis Towards Freezing $225 Million
Crypto exchange OKX and Tether discovered the funds and tracked the flow movements by leveraging the blockchain analysis firm Chainalysis tools and later alerted the federal authorities. The Secret Service directed Tether to freeze the $225 million.
Tether chief executive officer Paolo Ardoino hailed the recent collaboration with the Justice Department, underscoring its dedication to fostering a secure environment. He added that Tether targets establishing new safety standards within the digital asset space.
The move by Tether to freeze the hundreds-million funds underscores the devotion of crypto asset firms to eradicate the USDT as a conduit of illicit funds. Tether ranks as the third-largest crypto behind Bitcoin and Ethereum. A review of CoinGecko data reveals that the USDT market capitalization approximates $87.6 billion and ranked the leading digital asset in daily trade at $34.6 billion.
Tether stablecoin USDT involves crypto pegged to US fiat currency that investors use to enter and exit trades. Criminals leverage USDT for its ease of use without utilizing traditional finance (TradFi) and fiat currency.
Tether Involved in Several Controversies Attracting Federal Government Attention
Tether has suffered several controversies, particularly for alleged USDT involvement in illicit financing. Besides, Tether is accused of sluggish conduct in providing documentation proof of US dollars backing USDT.
Tether has suffered the wrath of US regulators that the entity lacks autonomous auditing. Previously, Tether agreed to extinguish conducting business in New York from 2021. The decision came after a two-year investigation by the New York attorney general investigation found false statements regarding the stablecoin backing.
Tether has become the subject of a bill tabled by US lawmakers targeting to bar federal government officials from conducting business with China-affiliated blockchain firms. The bill portrays Washington’s suspicions of Chinese ties within the cryptocurrency sector.
The bill explicitly prohibits US government officials from executing transactions with iFinex – the parent behind Tether.
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