USDT blockages on users' wallets: causes
According to the analytical service Duna Analytics, Tether blocked 1.37 billion USDT on more than 2,100 addresses. Moreover, more than half of blocked assets happened only in the last year, and such blockings happen every day, not once.
Tether most often blocks large wallets associated with criminal organizations involved in money laundering, terrorism financing, and other illegal activities. However, anyone can be blocked.
What can Tether block for, and who can block it?
Tether has complete control over the token contract, meaning it can block any USDT stablecoins on any wallet without prior notice or approval from the crypto community.
The Tether issuer is known to work closely with the Office of Foreign Assets Control (OFAC) and other regulators from various countries, including the Gulf States.
In view of this cooperation, regulators ordered the Tether issuer to block USDT tokens on cryptocurrency wallets that are included in the OFAC and other sanctions lists.
Moreover, the possibility of blocking USDT is entirely legal. It is even specified in terms of service provided by Tether, which is accepted by every user who wants to get a stablecoin directly through the issuer. According to the same terms of service, even after receiving the tokens, Tether remains the valid owner of USDT.
Here is a more detailed list of what actions an issuer can block USDT for:
- insider trading;
- cybercrime (including hacking attacks on DeFi protocols and crypto services);
- fraud;
- trafficking in drugs and other illicit goods;
- interaction with users and organizations on sanctions lists.
By the way, Tether is not the only centralized stablecoin that can be blocked — the same function, for example, is present in another well-known stablecoin: USD Coin (USDC).
How does blockchain happen, and can it be protected?
The smart contract developed by the Tether team initially includes a special BlackList feature that allows to block USDT tokens on specific addresses in seconds on all supported networks, including:
- Ethereum,
- BNB Smart Chain,
- Tron,
- Solana,
- Avalanche,
- Polygon,
- Arbitrum and others.
The tokens themselves are not deducted from the wallet but frozen: the blocked user cannot withdraw them to another address or perform any other operations with them.
The whole blocking procedure is as follows:
- Law enforcement agencies, regulators like OFAC, or analytics platforms like Chainalysis or Arkham Intelligence identify a suspicious transaction and submit a request to Tether to freeze USDT tokens;
- Exceptional Tether employees blacklist the addresses of the provided wallets;
- The issuer blocks USDT tokens at the blacklisted addresses through the BlackList function, which is written in the code of the smart contract of the stablecoin in the specified networks.
Any users, both legal entities and individuals, can fall under blocking. Users can also get into such situations accidentally, simply by receiving a stablecoin from a wallet that has recently been blacklisted. Such cases are rare, but they have been registered. Cases of blocking stablecoin on cold wallets have also been recorded.
To protect yourself from accidental blocking, you should receive cryptocurrency through trusted services or intermediaries whose wallets undergo thorough AML verification — especially when buying cryptocurrency. A list of such services can be found using trusted aggregators such as BestChange. By using verified exchangers, the risks of future blocking will be minimized. AML address verification can also be done independently — with the help of specialized services.
Buying cryptocurrency from unknown individuals or unverified services is dangerous. There is a certain probability that assets will be blocked in the end. The procedure for withdrawing assets from blocking will be complicated and require the involvement of lawyers.
Such an incident can be clearly demonstrated by the example of Garantex, a crypto exchange popular among traders, blocking USDT tokens in early 2025. Garantex was repeatedly found guilty of trading in "dirty" assets obtained illegally. As a result, Garantex and some of its assets were completely blocked, and all transactions, including withdrawals, were suspended for users.
