Tether Freezes $3.3B in USDT Linked to Illicit Funds Since 2023

• Tether froze approximately $3.3 billion in USDT linked to illicit activities between 2023 and 2025.
• Circle froze $109 million in USDC during the same period, making Tether's amount roughly 30 times larger.
• Data only includes Ethereum blockchain transactions, suggesting actual totals could be higher.
• Market structure suggests increased regulatory scrutiny could impact stablecoin liquidity and price action.

VADODARA, December 26, 2025 — Tether has frozen nearly $3.3 billion in USDT linked to illicit funds since 2023, according to data from AMLBot reported by Cointelegraph. This daily crypto analysis reveals a stark contrast with rival Circle, which froze $109 million in USDC during the same period. The statistics cover only Ethereum blockchain transactions, indicating potential underreporting.

Market Context & Background

Stablecoin regulation has intensified since the 2022 Terra-Luna collapse. The SEC and global regulators have pushed for stricter anti-money laundering (AML) compliance. Tether's dominance—with over $110 billion in circulation—makes it a primary target. Historical patterns show regulatory actions often precede market volatility. For instance, the 2023 SEC lawsuits against major exchanges triggered a 15% Bitcoin correction.

Related developments include Lugano's Bitcoin adoption facing extreme fear market reality and 40% of Ethereum supply now underwater as sentiment hits extreme fear.

What Happened?

Between 2023 and 2025, Tether froze approximately $3.3 billion in USDT assets linked to illicit activities. Circle froze $109 million in USDC. The data, sourced from AMLBot and reported by Cointelegraph, is limited to Ethereum blockchain transactions. This suggests actual frozen amounts across other chains like Tron or Solana could be higher. Tether has not publicly commented on the specific breakdown.

Technical Analysis & Price Action

Bitcoin trades at $88,646, up 1.55% in 24 hours. The global crypto sentiment index reads "Extreme Fear" at 20/100. Market structure suggests a potential liquidity grab near the $90,000 resistance level. The 50-day moving average at $85,200 provides immediate support. RSI at 52 indicates neutral momentum.

Bullish invalidation: A break below the $82,000 Fibonacci support level would signal bearish continuation. Bearish invalidation: A sustained move above $92,000 would invalidate the current consolidation pattern.

By The Numbers

Why It Matters

For institutions, this data highlights compliance risks in stablecoin usage. Large-scale freezes could impact liquidity in decentralized finance (DeFi) protocols, potentially causing short-term volatility. The SEC's increased focus on stablecoins, as outlined in recent SEC.gov guidance, suggests more regulatory actions ahead.

For retail traders, the extreme fear sentiment combined with regulatory pressure creates a high-risk environment. Market analysts note that similar freezes in 2023 correlated with a 5% drop in total stablecoin market cap within two weeks.

Community Sentiment

Industry voices on X/Twitter are divided. Bulls argue Tether's actions demonstrate proactive compliance, reducing systemic risk. One analyst posted: "Freezing illicit funds strengthens USDT's legitimacy long-term." Bears counter that the scale indicates underlying vulnerabilities. A crypto lawyer commented: "$3.3 billion in freezes questions the efficacy of Tether's initial screening processes."

Price Prediction / Future Outlook

Bullish case: If regulatory clarity improves and Tether's transparency reassures markets, Bitcoin could target $95,000 by Q1 2026. Stablecoin inflows might increase, supporting altcoin rallies.

Bearish case: Further regulatory crackdowns or a major stablecoin depeg event could trigger a sell-off. Bitcoin might retest $75,000. On-chain data indicates weak accumulation at current levels.

FAQs

What does Tether freezing funds mean? Tether restricts specific USDT addresses from transferring tokens, typically due to legal requests or suspected illegal activity.

Why did Tether freeze more than Circle? Tether's larger market share and historical usage in higher-risk jurisdictions contribute to the disparity.

How does this affect Bitcoin price? Regulatory news often causes short-term volatility, but long-term correlation is less clear.

Can frozen USDT be recovered? Recovery depends on legal outcomes; funds may be permanently locked or returned after investigations.

What chains are affected? Reported data covers Ethereum only; Tron and other chains likely have additional freezes.

Source Note: Market data and factual reporting in this article are sourced from original reports. Commentary and analysis provided by CoinMarketBuzz.