Private Crime Unit Reminds Stablecoin Users Who Control Their Funds as $127M Frozen

A partnership among three blockchain players comes as a stark reminder that stablecoin users do not control their funds, as millions are being frozen. However, this time, assets related to reportedly illicit activities have been targeted.

The T3 Financial Crime Unit said that since August of last year, $127 million in the most popular stablecoin, tether (USDT), has been frozen or seized from unspecified malicious actors who have taken part "in numbers of illicit activities." The sum is equal to around $127 million USD as well.

The unit was formed in August last year by blockchain analysis company TRM Labs, developers of the major Tron (TRX) blockchain, and the USDT issuer, stablecoin giant Tether.

Frozen and/or seized USDT has been issued on the Tron blockchain, which sometimes overtakes even the biggest smart contract platform, Ethereum (ETH), by USDT transaction volume.

According to T3, almost half of the frozen/seized sum was marked as money laundering. The second most common illicit activity, with $36 million frozen/seized, was related to investment scams, while illicit drugs came third, with $11 million frozen or seized. The rest is split among terrorism financing, North Korean hackers, blackmail scams, hacks/exploits, and violent crime.

Frozen/seized USDT

The unit claims they respond to identified threats within five days.

Justin Sun, the founder of Tron, reacted to the news, saying, "Criminals now have 100 million reasons to think twice before using Tron."

The partnership among the crypto players was established in August. TRM Labs is responsible for identifying transactions that have a connection to alleged illegal activities such as terrorism, sanctions evasion, theft, hacking, cybercrime, and fraud.

"The same features that make USDT on Tron attractive to legitimate users — low fees, lack of volatility, and ease of use — have also drawn the attention of scammers, terrorist financiers, and other threat actors," their announcement said at the time.

Tether and some other stablecoin issuers, such as the USD Coin (USDC) issuer, are already known for freezing hundreds of millions of funds at government requests. So far, these cases have been mostly related to terrorism and crypto crime.