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DOJ Investigation Leads Tether to Freeze $225M Associated with Human Trafficking Ring

Summary:
Besides freezing assets, Tether follows strict Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols. Tether, the USDT issuer, has announced the freezing of 225 million in USDT tokens. Globally, USDT has a market cap of .7 billion. It also offers dollar exposure to individuals who cannot access the dollar in their own market.  According to Tether, it traced the frozen funds to an international human trafficking ring in Southeast Asia. This move followed a collaboration with OKX and the Department of Justice (DOJ). The investigation took months and involved using tools from Chainalysis. During the investigation, Tether and OKX alerted relevant law enforcement agencies to the location of the illicit funds on the blockchain. Consequently, the United States Secret

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Besides freezing assets, Tether follows strict Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols.

Tether, the USDT issuer, has announced the freezing of 225 million in USDT tokens. Globally, USDT has a market cap of $87.7 billion. It also offers dollar exposure to individuals who cannot access the dollar in their own market.  According to Tether, it traced the frozen funds to an international human trafficking ring in Southeast Asia. This move followed a collaboration with OKX and the Department of Justice (DOJ). The investigation took months and involved using tools from Chainalysis.

During the investigation, Tether and OKX alerted relevant law enforcement agencies to the location of the illicit funds on the blockchain. Consequently, the United States Secret Service initiated a freeze request which Tether complied with.

Tether shared that the frozen wallets were self-custodied wallets on the secondary market and not linked to its customers. However, the company also stated it will work with law enforcement and wallet owners to unfreeze any lawful wallet that may have been included in the freeze.

Tether Remains Committed to Maintaining Industry Integrity

While Tether has constantly espoused its commitment to responsible blockchain use, the current action remains its largest-ever freeze of USDT in history.

Elsewhere, the stablecoin issuer recently froze funds in 32 cryptocurrency addresses linked to terrorism and warfare in Israel and Ukraine. The company says it has helped 31 agencies across 19 jurisdictions freeze about $835 million in assets. Last November, it also froze $46 million worth of its USDT stablecoin linked to bankrupt FTX.

Besides freezing assets, Tether follows strict Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols. Again, its compliance team conducts thorough screenings for all applicants to prevent engaging sanctioned entities. The firm also collaborates with law enforcement to investigate suspicious transactions on the secondary market.

According to the CEO of Tether, Paolo Ardoino, criminals using cryptocurrencies for illegal activities would be identified eventually. 

“We anticipate continued collaboration with law enforcement agencies as part of our commitment to global security and financial integrity,” he opined.

Collaboration of Industry Players Can Make the Crypto Space Safer

Ardoino believes collaborating with industry players can help create a more secure crypto environment. He said:

“Through proactive engagement with global law enforcement agencies and our commitment to transparency, Tether aims to set a new standard for safety within the crypto space.”

OKX Chief Innovation Officer Jason Lau shared similar sentiments about collaborative efforts. He noted that the exchange would remain proactive about contributing to such investigative efforts.

“Collaborating with industry stakeholders, including law enforcement agencies, is a key tenet of our approach to building trust and serving the public good as a leader in the crypto industry,” he concluded.

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