Tether has frozen approximately $225 million worth of Tether (USDT) tokens this week. This marks the biggest single freeze in Tether’s history so far.
The frozen funds were linked by Tether’s investigation to an international human trafficking syndicate operating predominantly in Southeast Asia. This criminal group is known to carry out “pig butchering” scams that target victims through fake romance overtures and eventually steal their money.
Tether collaborated on this investigation and unilateral asset freeze with the United States Department of Justice and major cryptocurrency exchange OKX. According to Tether’s Chief Executive Officer Paolo Ardoino, the move aims to proactively crack down on illicit financial crime and uphold higher integrity standards across the cryptocurrency sector.
However, Tether’s ability to simply freeze a quarter billion dollars worth of tokens also highlights the centralized authority commanded by Tether, which stands at odds with the decentralization ethos of cryptocurrencies. The frozen wallets were on secondary markets, not belonging directly to Tether’s customers – but the case shows Tether retains power to block funds on whim.
This “pig butchering” romance scam enabled by cryptocurrencies has seen an explosion of cases in Southeast Asia. Perpetrators ruthlessly target victims by faking romantic interest or alternatively by dangling false promises of extremely high investment returns. They interact closely with victims to gain trust and sympathy, eventually persuading them to transfer their personal savings before disappearing completely.
So while Tether’s mass asset freeze targeting scammers does serve some public good, it ultimately diminishes the decentralization and neutrality of the Tether stablecoin system. The case exposes the centralized control that Tether continues to wield on its network.
