Crypto giant Tether, which issues the third-largest digital currency USDT, today announced that it had frozen $225 million believed to belong to a human trafficking syndicate to help the U.S. Department of Justice.
In a Monday blog post, the stablecoin issuer said the freezing of the crypto was to help the DOJ.
Self-custodied digital wallets holding USDT were linked to a human trafficking syndicate in southeast Asia, Tether said. The criminals were running a "pig butchering" scam. It's a type of scheme that involves setting up a fake profile on social media to con someone into sending money for a bogus investment opportunity.
After crypto exchange OKX and Tether found out about the funds and tracked their movements using blockchain analysis firm Chainalysis tools, they alerted the authorities. The U.S. Secret Service asked Tether to freeze the funds.
"Our recent collaboration with the Department of Justice underscores our dedication to fostering a secure environment," Tether CEO Paolo Ardoino said, adding that Tether aims to "set a new standard for safety within the crypto space."
Tether mints USDT—the third-largest cryptocurrency after Bitcoin and Ethereum. USDT has a market cap of $87.6 billion and is the most-traded digital asset with a 24-hour trading volume of $34.6 billion.
As a stablecoin—a cryptocurrency backed by a stable asset—it is used to enter and exit trades quickly and without using a traditional bank or fiat currency.
But Tether is a controversial company: It has been slow to provide documentation to prove that U.S. dollars back USDT. U.S. regulators have taken issue with the fact that the entity is also not independently audited.
In 2021, Tether agreed to no longer do business in New York after a two-year New York Attorney General investigation found it had “made false statements about the backing” of its stablecoin.
Edited by Stacy Elliott.