Tether freezes $46 million in USDT FTX, setting a new precedent

Until now, Tether has only frozen USD funds held in private wallets at the request of law enforcement.

According to blockchain transaction data provided by WhaleAlert on Nov. 10, Tether appears to have frozen $46,360,701 belonging to troubled cryptocurrency exchange FTX in its Tron blockchain wallet. The move comes a day after the US Securities and Exchange Commission and the US Department of Justice launched a liquidity crunch investigation into FTX.

On October 11, a Tether spokesperson stated that the company only freezes private wallets when it receives a legitimate request from a verified law enforcement agent, and that “we do not freeze exchange or service wallets.” If confirmed, the FTX wallet freeze would be the first of its kind. On the same day, Japanese authorities ordered FTX to cease operations in their country after the exchange stopped withdrawing funds.

Update (November 10, 3:45 pm UTC): A Tether spokesperson stated, “While we cannot comment specifically, Tether regularly engages in open dialogue with law enforcement, including the US Department of Justice, as part of our commitment to cooperation, transparency, and accountability.”

“Against the background of rumors about the insolvency of the FTX crypto exchange and concerns about the financial situation of Alameda Research, we would like, first of all, to speak on behalf of the entire crypto ecosystem and reiterate that one crisis does not create an industry.”

In response to numerous unconfirmed rumors that Tether has access to USDT for the troubled exchange, a spokesperson confirmed that Tether has no credit with either FTX or its subsidiary trading firm Alameda Research. “Tether tokens are 100% backed by our reserves, and the assets backing the reserves exceed the liabilities. Tether has a strong, conservative and liquid portfolio that includes cash, cash equivalents and US Treasuries,” the source said, adding, “Tether will continue to focus on protecting these reserves.”

This story is in progress and more information will be added soon.