Since the Beginning of 2026, Tether Has Frozen $1.4 Billion in USDT. How Is This Possible?

The major stablecoin issuer has significantly accelerated the pace of asset freezes in 2026, breaking previous annual records in less than a full year.

In less than five months of 2026, the issuer of the largest stablecoin, $USDT — Tether — froze more than $1.4 billion worth of users’ $USDT assets. This is an absolute annual record and accounts for more than 25% of the total amount of frozen assets since 2017. The increase in frozen assets in recent years coincided with the creation in 2024 of the specialised organisation T3 (T3 FCU), formed by Tether, the Tron blockchain team, and analytics company TRM Labs.

As of 19 May, more than 10,000 blockchain addresses had been added to Tether’s so-called blacklist. More than $5.2 billion worth of $USDT has been frozen on these addresses across the Ethereum ($1.96 billion) and Tron ($3.26 billion) networks, according to BlockSec data.

For comparison, $1.25 billion was frozen during the whole of 2025, while almost $1.4 billion was frozen during all of 2024. Thus, from the beginning of 2024 to 19 May 2026, the total volume of frozen $USDT exceeded 75% of the total amount frozen since tracking of such operations began in 2017.

Why and How $USDT Is Frozen

Many users mistakenly believe that cryptocurrency cannot be seized or restricted by third parties. However, in the case of $USDT or any other centralised stablecoin (for example, Circle’s USDC), this is not true. Technically, the freeze occurs through an asset-freezing mechanism built into the stablecoin’s smart contract. Tether issues $USDT on several blockchain networks, but the majority of supply — around $186 billion or more than 97% of the total $USDT market capitalisation — exists on the Ethereum and Tron blockchains.

When law enforcement agencies send Tether a substantiated request, or when the company itself confirms illicit activity, it adds a specific address to a special registry known as the blacklist. From that moment, the tokens stored at that address become non-transferable — they cannot be sent, exchanged, or withdrawn. In effect, the $USDT on the blocked wallet becomes a “frozen” asset. It remains visible in blockchain explorers but cannot be moved. The blockchain address itself continues functioning, and any other tokens stored on it are not subject to restrictions.

This is possible because of $USDT’s architecture as a centralised token. Unlike Bitcoin or Ethereum, which have no issuer, Tether is the sole creator and controller of all $USDT tokens. The company originally embedded freeze functions into the smart contract, and only Tether itself can use them. This also means that although ETH itself cannot be frozen on a user’s address, tokens created on the Ethereum blockchain can be frozen if such functionality is programmed into their code.

As a result, a $USDT user never truly owns the tokens in the same sense as Bitcoin ownership. The user effectively controls an entry in the issuer’s ledger, and the issuer can change the status of that entry at any time. This is the key difference from Bitcoin. In the Bitcoin network, no one can freeze coins on another person’s address through a unilateral decision. This should not be confused with storing Bitcoin on exchanges or custodial services, where access to accounts can be restricted. If a user stores Bitcoin in a personal wallet and controls the private keys, nobody can freeze those coins.

A freeze can happen at any moment following a regulatory request or a decision by the company itself. In recent years, Tether has increasingly coordinated such actions with authorities from various countries.

Technically, tokens can also be “unfrozen”, and these actions are tracked as well. However, this most often happens not to return assets to their original owner, but to enable their transfer to wallets controlled by the authorities that confiscated them.

Growth in $USDT Freezes

The scale of $USDT freezes increased significantly after the creation of T3 — a specialised financial crime unit. This is a joint initiative by Tether, the Tron blockchain, and analytics company TRM Labs, established to rapidly identify and freeze illicit uses of $USDT on the Tron blockchain, which processes the majority of Tether stablecoin transactions.

According to Tether, during the first year and a half after T3 FCU was launched, the organisation froze $450 million worth of illicit assets worldwide. The project claims it identifies suspicious transactions linked to fraud, hacks, sanctions violations, and other crimes, and freezes the assets within 24 hours upon requests from law enforcement agencies.

At the beginning of 2026, T3 FCU was recognised by the Financial Action Task Force (FATF) as an “invaluable resource for law enforcement agencies worldwide”.

“Regulatory compliance is not simply an option, but part of our mission to protect users and prevent any illegal activity. At Tether, we are proud to cooperate with regulators and institutions to make blockchain technology more secure and trustworthy. This $450 million figure is only the beginning of what T3 is capable of, and its impact will continue to grow,” said Tether CEO Paolo Ardoino.

See also: "The US Saw the Largest Outflow From Spot Bitcoin ETFs Since January"

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