Tether Freezes 134 Wallets Linked to Islamic State

Tether announced it froze 134 wallets it identified as linked to the Islamic State group, blocking transfers and redemptions of USDT tied to those addresses.

The freezes followed internal investigations and information provided by law enforcement, according to the company.

Tether can immobilize USDT when it blacklists addresses on the blockchains where it issues tokens. That ability depends on the token’s technical design and the smart-contract platform used; blacklisting works where the issuer controls issuance and redemption rather than by universal enforcement across all ledgers.

Regulators and sanctions authorities have broadened enforcement targeting digital assets used to move value across borders, prompting private firms and public agencies to coordinate on identifying and blocking illicit transfers.

Compliance teams at issuers, exchanges and custodians use chain analysis and wallet-clustering tools to link addresses to sanctioned individuals and groups. When tokens or accounts are flagged, firms can freeze accounts, reject deposits from those addresses and file reports with authorities.

Tether did not disclose the value held in the frozen wallets or identify the specific networks involved. The company has previously blocked addresses tied to theft, ransomware and sanctioned actors when presented with evidence or formal designations.

Stablecoins are tokens pegged to fiat currencies and are used for trading, remittances and payments across multiple blockchains. USDT is among the largest stablecoins by market value and circulates on several networks.