Tether, issuer of the world’s largest stablecoin, said on Sunday it had frozen $85,877 in USDt (<a href="https://cointelegraph.com/tether-price-index" rel="noopener noreferrer nofollow" target="_self">USDT</a>) tied to stolen funds, acting in “collaboration with law enforcement.” The move has reignited debate over the role of centralized stablecoin issuers in enforcing crypto compliance.
The freeze, while relatively minor compared to other such actions by Tether, adds to the company’s growing record of intervention. Tether says it has frozen over <a href="https://tether.io/news/tether-recognized-for-assisting-the-united-states-secret-service-in-23m-freeze-related-to-transfers-on-sanctioned-exchange-garantex/" rel="noopener noreferrer nofollow" target="_blank">$2.5 billion</a> in USDt linked to illicit activity and has blocked more than 2,090 wallets in cooperation with global authorities.
<figure><img alt="Tether, Stablecoin" src="https://s3.cointelegraph.com/uploads/2025-07/01982df5-80fc-7ba1-b31a-173732d47614" title="">
 <figcaption style="text-align: center;">Source: <a href="https://x.com/paoloardoino/status/1946894570693820502" rel="noopener noreferrer nofollow" target="_blank">Paolo Ardoino</a>
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Related: <a href="https://cointelegraph.com/news/human-rights-crypto" rel="noopener noreferrer nofollow" target="_self">Embedding human rights into crypto isn’t optional, it’s foundational</a>
<h2 id="stablecoins-a-powerful-enforcement-tool">Stablecoins: a powerful enforcement tool</h2>
Unlike truly decentralized and censorship-resistant cryptocurrencies such as Bitcoin and Ethereum — where no single entity can block or reverse transactions — Tether and other stablecoin issuers can freeze USDt and their respective stablecoins at the smart contract level.
This centralized control lets stablecoin issuers quickly respond to hacks, scams and regulatory pressure. In Tether’s case, it has translated into some of the largest asset freezes in crypto history.
In November 2023, <a href="https://cointelegraph.com/news/tether-freezes-usdt-scammers-doj-investigation" rel="noopener noreferrer nofollow" target="_self">Tether froze $225 million in USDt</a> from wallet addresses linked to a Southeast Asian human-trafficking and romance-scam network (often called a “pig butchering” scheme). The action was carried out in collaboration with OKX and US law enforcement, including the Department of Justice and the Secret Service.<iframe width="100%" height="315" src="https://www.youtube.com/embed/aLc2U0YNFCA?start=" frameborder="0" allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen loading="lazy" sandbox="allow-scripts allow-same-origin allow-popups allow-forms"></iframe>
In June 2025, Tether took aim at 112 wallets holding roughly $700 million in USDt across the Tron and Ethereum <a href="https://www.ainvest.com/news/tether-freezes-700-million-usdt-wallets-linked-iran-2506/" rel="noopener noreferrer nofollow" target="_blank">blockchains</a>. The funds were tied to Iran-linked entities, and the freeze was seen as part of broader efforts to enforce US sanctions amid rising geopolitical tensions.&nbsp;&nbsp;
These <a href="https://cointelegraph.com/news/tether-tron-trm-labs-froze-100-million-usdt-2024" rel="noopener noreferrer nofollow" target="_self">high-profile interventions</a> reflect a shift in how stablecoins are perceived — not just as digital dollars, but as active instruments of financial enforcement. CEO Paolo Ardoino has embraced Tether’s evolving identity as a crypto compliance enforcer.
“Tether’s ability to track transactions and freeze USDt linked to illicit activity sets it apart from traditional fiat and decentralized assets,” Ardoino wrote in a March blog post on Tether’s <a href="https://tether.io/news/tether-recognized-for-assisting-the-united-states-secret-service-in-23m-freeze-related-to-transfers-on-sanctioned-exchange-garantex/" rel="noopener noreferrer nofollow" target="https://tether.io/news/tether-recognized-for-assisting-the-united-states-secret-service-in-23m-freeze-related-to-transfers-on-sanctioned-exchange-garantex/">website</a>. “We take our responsibility to combat financial crime seriously and will continue working closely with global law enforcement agencies.”
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<h2 id="tether-s-enforcement-power-sparks-concern">Tether’s enforcement power sparks concern</h2>
Tether’s ability and readiness to freeze user funds has raised concerns among some people in the crypto community. Critics argue that if stablecoin issuers routinely cooperate with law enforcement, the result could resemble a central bank digital currency (CBDC), undermining the core crypto values of financial sovereignty and decentralization.
Users on X called Tether’s recent action a “slippery slope.” One user wrote, “Can anybody explain how this isn’t exactly what a CBDC is?”
<figure><img alt="Tether, Stablecoin" src="https://s3.cointelegraph.com/uploads/2025-07/01982df1-5893-78db-a980-951c86214996" title="">
 <figcaption style="text-align: center;">Source: <a href="https://x.com/FiatnamVeteran/status/1946956096066769381?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1946956096066769381%7Ctwgr%5E488f248aca84568c769f0916c1870ef557bedc0a%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fcms.cointelegraph.com%2Farticles%2F35626%3Flanguage%3D1" rel="noopener noreferrer nofollow" target="_self">Fiatnam Veteran</a>
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 Another person following the story noted that “centralized control has its moments.” In this case, the “quick response from Tether here saved $85k from disappearing into the void.” 
<figure><img alt="Tether, Stablecoin" src="https://s3.cointelegraph.com/uploads/2025-07/01982df3-1513-7fa3-b68a-0676be5beebe" title="">
 <figcaption style="text-align: center;">Source: <a href="https://x.com/FiatnamVeteran/status/1946956096066769381?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1946956096066769381%7Ctwgr%5E488f248aca84568c769f0916c1870ef557bedc0a%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fcms.cointelegraph.com%2Farticles%2F35626%3Flanguage%3D1" rel="noopener noreferrer nofollow" target="_self">T</a>
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 <a href="https://cointelegraph.com/magazine/bitcoin-payments-undermined-centralized-stablecoins/" rel="noopener noreferrer nofollow">Magazine: Bitcoin payments are being undermined by centralized stablecoins</a>

Stablecoin or CBDC? Tether’s latest freeze adds fuel to decentralization debate

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