Tether Freezes $85K USDT: Centralization Debate Heats Up
Tether, the entity behind the leading stablecoin USDT, recently froze $85,877 linked to stolen funds. This action, done in cooperation with law enforcement, has once again ignited the discussion about how centralized stablecoin issuers impact crypto compliance.
Tether's Growing Influence
While this freeze is relatively small, it adds to Tether's history of interventions. The company reports freezing over $2.5 billion USDT associated with illicit activities and blocking over 2,090 wallets through collaborations with global authorities.
Unlike decentralized cryptocurrencies like Bitcoin, Tether can freeze USDT at the smart contract level. This enables swift action against hacks, scams, and regulatory pressures, positioning stablecoins as enforcement tools.
In November 2023, Tether froze $225 million USDT connected to a human-trafficking and romance-scam network, working with OKX and U.S. law enforcement. In June 2025, they targeted 112 wallets holding about $700 million USDT on Tron and Ethereum, tied to Iran-linked entities, enforcing U.S. sanctions.
CEO Paolo Ardoino emphasizes Tether's role in combating financial crime: "Tether’s ability to track transactions and freeze USDt linked to illicit activity sets it apart from traditional fiat and decentralized assets… We take our responsibility to combat financial crime seriously and will continue working closely with global law enforcement agencies."
Concerns over Centralized Control
However, Tether's power to freeze funds raises concerns. Critics worry that close cooperation with law enforcement could turn stablecoins into de facto central bank digital currencies (CBDCs), undermining crypto's core principles of financial sovereignty and decentralization.
Some users on X (formerly Twitter) view Tether's actions as a "slippery slope," questioning whether this resembles a CBDC. Others acknowledge the benefits, noting that Tether's quick response saved $85k from disappearing.
This ongoing debate highlights the need for balanced solutions that protect users while upholding the decentralized ethos of cryptocurrency. Companies like Codeum contribute to this balance by offering services such as smart contract audits and KYC verification, enhancing the security and compliance of blockchain projects.