20 November 2023 — Tether, the largest company in the cryptocurrency ecosystem, and leading global crypto exchange and Web3 technology company OKX, today announced that they have assisted the United States Department of Justice (DOJ) in an investigation that led to Tether proactively and voluntarily freezing approximately 225 million in USDT tokens in external self-custodied wallets linked to an international human trafficking syndicate in Southeast Asia responsible for a global “pig butchering” romance scam.
The joint investigation was conducted using tools from blockchain analysis firm Chainalysis, and the action by Tether represents the largest-ever freeze of USDT in history.
During a months-long investigative effort by Tether and OKX, U.S. law enforcement agencies, including the DOJ, were proactively alerted to the location of the illicit funds by analyzing the flow of those funds through the blockchain. These actions prompted the initiation of a freeze request by the United States Secret Service and a voluntary freeze by Tether. The frozen wallets are on the secondary market and are not associated with Tether’s customers. To the extent lawful wallets were captured by this operation, Tether will work quickly with law enforcement and the owners of those wallets to unfreeze them, as appropriate.
The proactive measures by the two firms is an example of how cryptocurrency industry players can work together with global law enforcement agencies to effectively deter criminal use. The transparency of blockchain transactions serves as a powerful deterrent to illicit activities, setting a significant precedent for the industry.
"Through proactive engagement with global law enforcement agencies and our commitment to transparency, Tether aims to set a new standard for safety within the crypto space,” said Paolo Ardoino, CEO of Tether. “Our recent assistance to the Department of Justice underscores our dedication to fostering a secure environment. We believe in leveraging technology and relationships, such as our collaboration with OKX, to proactively address illicit activities and uphold the highest standards of integrity in the industry."
OKX Chief Innovation Officer Jason Lau said: "Collaborating with industry stakeholders, including law enforcement agencies, is a key tenet of our approach to building trust and serving the public good as a leader in the crypto industry. At OKX, we will continue to contribute to these initiatives on a proactive basis."
In a dedicated effort to maintain industry integrity, Tether follows stringent Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols, in line with the Bank Secrecy Act and the best practices of financial institutions. Additionally, Tether's compliance team conducts thorough enhanced due diligence screenings for all applicants, cross-referencing them against the sanctions databases of the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC). This measure allows Tether to avoid engaging with sanctioned individuals, entities, or deposit addresses. Further, Tether collaborates with global law enforcement in the furtherance of the prevention of unlawful actions through the investigation of suspicious transactions on the secondary market.
Tether remains committed to expeditiously working with law enforcement and affected wallet owners to swiftly resolve concerns regarding lawful wallets captured by these freezes.
