Tether has taken significant measures to combat suspected criminal activity within the cryptocurrency space, freezing approximately $4.2 billion in USDt over the past three years. This action comes in response to intensified scrutiny from regulators and law enforcement agencies, particularly following the events of 2023.
According to recent statements from Tether, the freezing of these tokens primarily relates to wallets linked to fraudulent activities. The majority of these restrictions have been implemented since the beginning of 2023, reflecting a broader trend of increased regulatory enforcement. In fact, the supply of USDt has witnessed a sharp decline, falling by $2.7 billion in just two months, marking the most significant drop since 2022.
As the leading stablecoin with a current market capitalization exceeding $180 billion, USDt has seen its supply grow from around $70 billion three years ago. However, this growth has been accompanied by a rise in enforcement actions. Tether”s ability to freeze tokens directly on the blockchain allows for swift action in response to official requests from authorities, highlighting the growing reliance on issuer cooperation in investigations.
Recent enforcement actions underscore this trend. Tether played a crucial role in assisting the US Department of Justice with the seizure of nearly $61 million in USDt, funds associated with deceptive “pig-butchering” scams that exploit victims over time. Moreover, in a recent case this month, Turkish officials requested Tether to freeze approximately $544 million in cryptocurrency tied to illegal online betting and money laundering activities, showcasing the necessity for cross-border coordination in regulatory efforts.
Expansion of Enforcement Actions Across Stablecoins
Blockchain analytics firm Elliptic has reported a significant increase in blacklist activity across stablecoins. By late 2025, both Tether and Circle are expected to have blacklisted around 5,700 wallets that collectively held about $2.5 billion. Notably, approximately three-quarters of these addresses contained USDt at the time of their freezing. This highlights the evolving role of stablecoin issuers in regulatory compliance and enforcement.
Recent Trends in USDt Supply
Simultaneously, the circulating supply of USDt has started to contract noticeably, with a drop of around $1.5 billion recorded in February alone, following a decline of $1.2 billion in January. These reductions mark the steepest declines seen in three years, comparable only to the aftermath of the FTX collapse in late 2022. Analysts suggest that this contraction may be related to tighter liquidity conditions in the market, although Tether attributes these changes to short-term distribution shifts.
Despite these fluctuations, USDt maintains its dominant position in the stablecoin market. The interplay between enforcement actions and supply adjustments occurs alongside ongoing market growth, underscoring the complexities within the cryptocurrency landscape.
