Tether freezes USDT: How romance scams played a part

• Tether voluntarily froze 225 million USDT tokens. 
• The funds were linked to a global crime syndicate known for carrying out pig butchering scams.

Stablecoin issuer Tether [USDT] worked together with crypto exchange OKX [OKB] and the United States Department of Justice (DOJ) to voluntarily freeze 225 million USDT tokens connected to a global human trafficking syndicate.

The action was the largest freeze of USDT ever, according to a press release from the company behind the $88 billion-valued stablecoin.

The stakeholders worked closely to track the movement of illegal crypto funds using tools from blockchain analysis firm Chainalysis. The frozen assets worth $225 million were spread across 37 wallets, as per Lookonchain data.

Tether stated that the wallets in question were on the secondary market and did not belong to its clients. It clarified that it would work with agencies to unfreeze wallets that didn’t flout any laws.

Beware of romance!

As per additional details, the criminals operated in Southeast Asia. They siphoned the funds using one of the fastest-growing financial scams in the crypto world — the pig butchering scam.

For the uninitiated, the investment scam involves scammers coming into contact with victims through dating apps and social media. After winning their trust, the fraudsters trick the victims into investing in a platform recommended by the former.

However, after getting sufficient funds on the fraudulent platform, the con artist disappears, taking all the money with them. The USDT tokens from these wallets are then sent to OKX exchange.

The number of reported cases for the so-called pig butchering scam doubled from 2022 to 2023, according to a Binance research. The Federal Bureau of Investigation (FBI) has repeatedly cautioned people to be wary of such online frauds.

Good signs for the industry

The case served as a classic example of collaboration between crypto companies and law enforcement agencies to deter criminal use of digital assets.

Moreover, the transparent nature of blockchains played a crucial role in locating the wallets. Needless to say, all the transactions are open to the public and any interested government agency.