Tether Implements Measures to Enhance Security
Tether, the organization behind the largest stablecoin, has announced a voluntary measure to freeze tokens in wallets associated with individuals on the Office of Foreign Asset Controls (OFAC) list of sanctioned entities. The aim of this action is to prevent potential misuse of Tether tokens and strengthen security measures. Starting from December 1, 2023, Tether’s initiative primarily targets individuals on the Specially Designated Nationals (SDN) List, demonstrating their commitment to legal compliance and improving the security framework of their platform and the broader cryptocurrency ecosystem.
Wallet Freeze and Analyzing Token Holdings
An analysis using Etherscan revealed that Tether has frozen 161 Ethereum wallets. Interestingly, 150 of these wallets currently do not contain any USDT tokens, and the historical token holdings of these wallets are uncertain. The remaining 11 wallets collectively hold over 3.5 million USDT tokens, with one address alone holding 3.4 million. This address has been linked to the recent hacking incident of the betting platform Stake. Some of these wallets were also found to have interactions with the coin-mixing service in the past six months. Notably, one of the wallets is connected to the $625 million Ronin Bridge attack by the Lazarus Group, a North Korean hacking group.
Token Distribution and Transactions
Among the remaining wallets, two hold approximately 20,000 tokens each, and a third wallet contains close to 60,000 tokens. The other wallets have smaller amounts, with one wallet holding only 16 cents worth of frozen USDT. Prior to the freeze, there was a transaction of over 400,000 USDT from THORChain through two wallets, complicating traceability. These intermediary wallets, however, do not appear to be affected by Tether’s freezing action. There is also a possibility that some of the frozen wallets hold USDT tokens on multiple chains, including Ethereum Layer 2 networks. Searching on Polygonscan revealed two wallets with USDT on the Polygon network, but no USDT-containing wallets on the sanctioned list were found on Arbitrum and Optimism networks.
CEO Paolo Ardoino’s Statement
Paolo Ardoino, CEO of Tether, expressed the company’s commitment to maintaining high safety standards through the voluntary freezing of wallet addresses. He emphasized the goal of strengthening the positive use of stablecoin technology and promoting a safer stablecoin ecosystem for all users. This security enhancement measure is expected to set a precedent in the cryptocurrency market, showcasing Tether’s dedication to user safety and contributing to the overall integrity and security of the cryptocurrency landscape.
THORChain’s Efforts in Preventing Illegal Activity
THORSwap, a decentralized exchange (DEX) based on THORChain, recently paused trading services after researchers identified illicit funds flowing through the exchange. The decision to enter “maintenance mode” was made after consulting advisors, legal counsel, and law enforcement. While swaps were temporarily paused, THORChain users could still manage their lending and liquidity-providing operations on the exchange. THORChain has since reopened and implemented new measures to prevent similar incidents of illicit funds from hackers or money launderers.
Hot Take: Strengthening Security Measures for Greater Trust
Tether’s move to freeze tokens in wallets connected to sanctioned entities reflects its commitment to legal compliance and proactive security measures. By taking this initiative, Tether aims to prevent potential misuse of its tokens and further enhance the security of its platform and the broader cryptocurrency ecosystem. This step sets a precedent in the industry, demonstrating Tether’s dedication to user safety and reinforcing the integrity and trust within the cryptocurrency landscape. THORChain’s efforts to prevent illegal activity on its decentralized exchange also highlight the industry’s collective commitment to maintaining a safe and secure environment for all participants.
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