Tether freezes $225m USDT tied to DoJ trafficking syndicate investigation

The funds seized by Tether were linked to a “pig butchering” scam that cost U.S. citizens $3.3 billion in 2022, according to the FBI. 

Stablecoin issuer Tether reported freezing $225 million worth of its cryptocurrency USDT in a U.S. Department of Justice (DOJ) probe targeting an international human trafficking ring operating in Southeast Asia. 

Per the FBI, the “pig butchering” scam involved a romantic scheme set up by scammers who engineered fake crypto exchanges to steal billions from American users. The theft usually started with a “Hi” text and ended with victims trading on platforms operated by this syndicate.

Blockchain analytics provider Peckshield pointed to at least six blacklisted wallet addresses. One wallet held as much as $87 million in Tether’s U.S. dollar-pegged stablecoin. These funds were held in external self-custodial wallets, meaning they did not belong to Tether customers.

The digital payment company said on-chain tracking tools provided by Chainlysis were leveraged in a joint investigation with the DoJ and crypto exchange OKX, per a Nov. 20 statement. 

Our recent collaboration with the Department of Justice underscores our dedication to fostering a secure environment. We believe in leveraging technology and relationships, such as our collaboration with OKX, to proactively address illicit activities and uphold the highest standards of integrity in the industry.

Paolo Ardoino, Tether CEO

Jason Lau, OKX’s chief innovation officer, added that communication efforts between crypto stakeholders and law enforcement are a cornerstone for bolstering the public’s safety. 

The report comes nearly a month after two U.S. policymakers pressed the DoJ to consider prosecuting Tether and Binance for their alleged involvement in money laundering, terror financing, and other criminal acts. 

Prior to the proposal from Senator Cynthia Lummis and Representative French Hill, Tether had experienced a leadership change that installed former CTO  Paolo Ardoino as CEO to replace Jean-Louis van der Velde. 

USDT’s operator, a major U.S. treasury bill holder, also froze 32 addresses linked to illicit finance in Israel and Ukraine, two countries amid geopolitical conflict.