Tether’s $85,877 Freeze Sparks Centralization Debate

* Tether freezes $85,877 in stolen USDT in collaboration with law enforcement. * Move reignites debate on stablecoin centralization and its parallels with CBDCs. On July 21, 2025, Tether froze $85,877 in stolen USDT. According to a Cointelegraph report from the same day, the company collaborated with law enforcement to prevent criminals from using the funds. This action marks the latest effort by Tether to combat cryptocurrency-related financial crime and has reignited debates within the crypto community about the centralization of stablecoin operations and the implications for financial sovereignty. Tether's ability to freeze funds at the smart contract level, a feature that differentiates it from decentralized cryptocurrencies like Bitcoin and Ethereum, allows the company to act swiftly to block funds tied to unlawful activities. To date, the company has frozen over $2.5 billion in USDT across 2,090 wallets in collaboration with global authorities. Previous freezes highlight this practice. For instance, in November 2023, Tether partnered with the U.S. Department of Justice and crypto exchange OKX to block $225 million in USDT linked to a Southeast Asian romance scam and human trafficking operation. More recently, in June 2025, Tether froze $700 million in USDT across 112 wallets on the Tron and Ethereum blockchains in compliance with U.S. sanctions against Iranian entities. Tether positions itself as a compliance-driven entity within the cryptocurrency space. CEO Paolo Ardoino consistently emphasizes the company’s dedication to combating financial crime, highlighting partnerships with law enforcement agencies as a way to deter illicit activity. However, this stance sparks criticism within the crypto community. Critics raise concerns about financial sovereignty, arguing that Tether’s centralized enforcement model mirrors the characteristics of central bank digital currencies and questioning how decisions to freeze funds are balanced with the decentralized ethos of cryptocurrency. Conversely, other community members acknowledge the practical benefits of Tether’s actions. In this latest case, the company’s proactive response prevented the loss of the stolen $85,877, which underscores its effectiveness in addressing financial crime. According to CoinMarketCap on July 21, Tether USDt (USDT) was trading at $1 as of 21:08 UTC, with its 24-hour trading volume down 0.005%.