The Myth of Unstoppable Crypto
Many cryptocurrency users believe that once they own a digital asset, it is theirs forever and cannot be touched by anyone. While this is true for purely decentralized assets like Bitcoin (on its own network) held in a self-custodial wallet, it is not true for centralized stablecoins like Tether (USDT).
How Tether (USDT) Can Be Frozen
Tether (USDT) operates as a centralized token on various blockchains (Ethereum, Tron, Solana, etc.). The smart contract that governs USDT includes a specific function: addBlackList.
This function allows Tether Limited, the issuing company, to:
- Freeze funds in any specific wallet address.
- Prevent that address from sending or receiving USDT.
- Ultimately destroy (burn) the frozen tokens and reissue them elsewhere.
Why Would Tether Freeze Funds?
Tether does not freeze funds arbitrarily. They typically act under two circumstances:
- Law Enforcement Requests: When they receive a valid subpoena or freeze order from law enforcement agencies (like the FBI, DOJ, or Secret Service) investigating crime.
- Security Breaches: To freeze funds stolen from major exchange hacks or DeFi protocol exploits before the hackers can launder them.
USDT vs. USDC vs. Decentralized Stablecoins
It is important to note that USD Coin (USDC), issued by Circle, has the exact same freezing capability. It is a feature of being a compliant, regulated stablecoin.
In contrast, decentralized stablecoins like DAI (managed by MakerDAO) are strictly governed by smart contracts and generally cannot be frozen by a central administrator, although they may still have exposure to centralized assets in their reserves.
What This Means for Scam Victims
If you have lost money to a “Pig Butchering” scam or investment fraud involving USDT, there is a glimmer of hope, but the bar is high.
You cannot ask Tether to freeze funds yourself. They will not respond to individual user requests due to liability reasons. You must file a report with law enforcement (like the FBI IC3), and they must send the official request to Tether.
Protect Yourself
- Never store your life savings in a centralized stablecoin for long periods if you fear confiscation.
- Be wary of anyone asking for payment specifically in USDT.
- Understand that “crypto is irreversible” is a general rule, but high-level intervention exists for centralized tokens.
