This week, Tether took swift action after the US Treasury imposed sanctions on four cryptocurrency wallets associated with Iran's Central Bank. The company froze $131 million worth of USDT that was stored in these accounts just hours following the sanctions announcement.
Treasury Secretary Scott Bessent confirmed the freeze, explaining that the Office of Foreign Assets Control (OFAC) updated its existing designation list to include the new Tron addresses. Notably, these wallets have been linked to illicit activities supporting the IRGC-Qods Force and Hezbollah since previous sanctions were set in place against the bank in 2019.
In his statement, Bessent emphasized the commitment to restricting Iranian access to its illicit financial operations, particularly in the space of digital assets. Prior to the freeze, the wallets had processed over $165 million in stablecoins, with an estimated $34 million being withdrawn before Tether locked the accounts.
It’s important to understand how these freezes work. While the tokens remain visible on the blockchain, the sanctioned addresses are prevented from executing any transactions. This mechanism does not equate to a seizure, as Iran still technically controls the wallets but cannot utilize them.
The process for Tether is remarkably efficient: once OFAC designates the addresses, Tether can enforce the freeze without needing a court order. This swift action showcases how a private company can play a key role in enforcing US foreign policy, especially given Tether's current market valuation of $184 billion.
This is not the first time Tether has intervened in such a manner. Earlier this year, the company successfully blocked $344 million in similar cases, bringing the total to approximately $475 million in frozen Iranian funds. Overall, the estimated amount of seized Iranian cryptocurrency has now reached around $1 billion.
Looking ahead, the implications of these actions are severe for Iran, as the US continues to dismantle its expansive $7.7 billion crypto network. Any USDT holdings that Iran retains are now precariously close to facing potential freezes with just one more OFAC listing.
Contrastingly, Circle, the issuer of USDC, is more methodical in its approach to sanctions. Recently, Circle faced a criminal complaint for not complying with a court order related to a stolen USDC case. While Tether claims it has frozen around $4.7 billion linked to crime and returned $1.1 billion to victims, Circle adheres to a stricter legal framework that delays its actions.
This material is for informational purposes only and not financial advice.
