Tether Holdings Limited, the Hong Kong-based company and issuer of USDT, the world’s largest stablecoin by circulating supply, has frozen an account holding more than $4.1 million of the token on Ethereum, data reveals in chain of June 19.
Tether freezes $4.1 million USDT in Ethereum
Tether froze $4.11 million USDT on June 19 without explanation, records captured by WhaleAlert the same day reveal.
At Etherscan, an analytics platform for tracking ethereum (ETH) and Ethereum-based tokens, logs show that the USDT issuer had marked the wallet as frozen. At the same time, the associated address had four tokens in total. In addition to USDT, other assets were tagged as “suspicious.”
It could not immediately be verified where the funds came from and why the USDT issuer decided to freeze the account.
On Reddit, a user noted that the frozen account belonged to a Huobi user. Most of this Tether was funneled in March 2023, and on the speculation of it, the owner could be involved in suspicious activity. As a result, the USDT issuer swooped in and froze the holdings of the address.
Tether Holdings Limited is a centralized entity and the official issuer of USDT. As of June 19, there were over $83.1 billion worth of USDT in circulating supply.
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Theoretically, every token in circulation on any blockchain or Layer 2 platform on which USDT is issued is backed 1:1 with cash or cash equivalents. In this way, each USDT in circulation can be exchanged for one USD.
For its offering, USDT plays a pivotal role in cryptocurrencies, enabling the flow of capital to and from traditional finance while also allowing holders to engage in other activities, including decentralized finance (DeFi).
Centralization concerns
Despite what USDT brings to the crypto table, the issuer’s ability to freeze assets goes against the basic tenets espoused by the blockchain. Technically, cryptocurrencies are supposed to be borderless and censorship resistant.
Some people have criticized Tether Holdings Limited for freezing the address. On Reddit, a social media platform, a user saying Tether acts like a bank and can freeze USDT on any chain the token is in circulation if ordered to do so by the police.
Another noted that the issuer has built a kill switch into the token code and can, at any time, block an address.
