Tether has frozen approximately $4.2 billion worth of its USDt (USDT) tokens over the past three years in response to suspected illicit activity, according to a recent report. Most of these actions reportedly took place from 2023 onward, as regulators and law enforcement agencies intensified oversight of crypto-related fraud, scams, and sanctions violations.
USDt remains the largest stablecoin in circulation, with more than $180 billion outstanding — a sharp increase from about $70 billion three years ago. As a centralized issuer, Tether has the authority to freeze tokens directly on the blockchain by blacklisting wallet addresses, typically following formal requests from relevant authorities.
The move reflects the growing role stablecoin issuers play in supporting investigations and limiting the flow of suspicious funds across digital asset markets.
Law Enforcement Collaboration and USDT Supply Trends
Tether recently confirmed it assisted the United States Department of Justice in seizing nearly $61 million in USDT tied to so-called “pig-butchering” scams. These schemes involve fraudsters building trust with individuals over time before convincing them to transfer money into deceptive investment platforms.
Earlier this month, Tether also froze approximately $544 million in cryptocurrency at the request of Turkish authorities, restricting funds allegedly linked to illegal online betting and money laundering operations.
According to blockchain analytics firm Elliptic, by late 2025, Tether and Circle had blacklisted around 5,700 wallets holding about $2.5 billion in digital assets. Roughly three-quarters of those wallets contained USDT at the time they were frozen, underscoring the token’s dominant presence in global crypto transactions.
Meanwhile, data from CoinMarketCap shows USDT recorded its largest monthly supply contraction in three years, with circulating supply falling by approximately $1.5 billion in February after a $1.2 billion drop in January. The trend echoes liquidity tightening seen after the collapse of FTX in late 2022.
Tether has stated that the recent decline reflects short-term distribution adjustments rather than weakening demand, noting that USDC also experienced a multibillion-dollar supply reduction during the same period.
