Tether, in an unprecedented move, has frozen approximately $225 million in USDT tokens, linked to a human trafficking syndicate in Southeast Asia.
This action, the largest-ever freeze of USDT in history, was executed in collaboration with the United States Department of Justice (DOJ) and global crypto exchange OKX.
The decision, rooted in a commitment to combat illicit activities, marks a significant moment in the cryptocurrency world, showcasing the potential of blockchain transparency in deterring criminal activities.
Unveiling the Underlying Cause
The initiative to freeze these substantial assets stemmed from an extensive investigation that uncovered their connection to a global ‘pig butchering’ romance scam operated by a human trafficking syndicate.
This investigative effort, conducted by Tether and OKX, utilized tools from blockchain analysis firm Chainalysis.
The proactive measures taken by these firms led to the discovery of the illicit funds, prompting a freeze request by the United States Secret Service and a voluntary freeze by Tether.
Notably, the frozen wallets are on the secondary market and are not linked to Tether’s direct customers. Tether has expressed its commitment to working with law enforcement and lawful wallet owners to resolve any concerns and unfreeze legitimate assets.
Setting a Precedent for Industry Integrity
This collaborative action between Tether, OKX, and U.S. law enforcement agencies illustrates how cryptocurrency industry players can effectively partner with global enforcement to address and deter criminal use.
The transparent nature of blockchain transactions played a crucial role in tracing and identifying the illicit funds, setting a significant precedent for the industry.
Paolo Ardoino, CEO of Tether, emphasized the company’s dedication to fostering a secure environment within the crypto space, underlining their belief in leveraging technology and relationships to proactively address illicit activities.
In line with maintaining industry integrity, Tether adheres to stringent Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols, aligning with the Bank Secrecy Act and best practices of financial institutions.
Furthermore, Tether’s compliance team conducts comprehensive enhanced due diligence screenings, cross-referencing against the sanctions databases of the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).
This vigilance ensures Tether avoids interactions with sanctioned individuals, entities, or deposit addresses. Moreover, Tether remains actively engaged with global law enforcement in preventing unlawful actions by investigating suspicious transactions on the secondary market.
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