Let's talk about tether

[Herold]

https://talkimg.com/images/2026/03/02/U335Lz.jpeg

What do you think about what Tether is doing so far? Are they doing the world a favour ? Or it's for their own good only? Because I am thinking about all these seized funds, what are they going to do with it? Since they are not the government can we say that they will do the same thing that the government is known for? ( Seizing and pocketing).

USDT being freezeable isn’t some “new betrayal”, it’s literally the deal you accept when you use an IOU issued by a company that needs banking access.
What bothers me isn’t the existence of blacklisting, it’s the lack of a clear, auditable process: who requests it, what standard of proof, and where seized funds actually end up (burned? escrow? handed over?). If you treat USDT like cash, you’re setting yourself up for a rude surprise.

[justdimin]

What do you think about what Tether is doing so far? Are they doing the world a favour ? Or it's for their own good only? Because I am thinking about all these seized funds, what are they going to do with it? Since they are not the government can we say that they will do the same thing that the government is known for? ( Seizing and pocketing).

The fact that they can freeze assets is proof enough that it's heavily centralized and we should not be using it. Don't get me wrong, I am not saying that illegal activity should be freely done, I could get hacked tomorrow and I would request the funds to be frozen and given back to me as well in which case centralization would work for me. I am saying that this is a feature that is not good for crypto itself and it could be abused, you could do absolutely nothing wrong and it could still be gone and because of that I hate it.

In the past ETH has done roll backing their blocks and few other coins like XRP are also doing this kind of freezing funds of criminals but I am not seeing those things going against their reputations. So, this centralized thing of tether will not be bothered by crypto community and I am sure tether will continue its stay with us, we just need to move on.

[BitJannik]

What do you think about what Tether is doing so far? Are they doing the world a favour ? Or it's for their own good only? Because I am thinking about all these seized funds, what are they going to do with it? Since they are not the government can we say that they will do the same thing that the government is known for? ( Seizing and pocketing).

The fact that they can freeze assets is proof enough that it's heavily centralized and we should not be using it. Don't get me wrong, I am not saying that illegal activity should be freely done, I could get hacked tomorrow and I would request the funds to be frozen and given back to me as well in which case centralization would work for me. I am saying that this is a feature that is not good for crypto itself and it could be abused, you could do absolutely nothing wrong and it could still be gone and because of that I hate it.

In the past ETH has done roll backing their blocks and few other coins like XRP are also doing this kind of freezing funds of criminals but I am not seeing those things going against their reputations. So, this centralized thing of tether will not be bothered by crypto community and I am sure tether will continue its stay with us, we just need to move on.

I think the key is to treat Tether as a tool, not as real crypto freedom. Most people use USDT for trading, sending value fast, or as a parking spot during volatility. For that, centralization is the trade-off you accept. But if someone wants money that can't be frozen by the company, the USDT is the wrong choice, and self-custody BTC is closer to that idea.

A lot of people dont notice this until it hits them, even if the blockchain is open, the issuer can still blacklist addresses. So the risk isnt only criminals. It can be mistakes, false flags, or account issues too. So yeah, USDT will probably stay because its convenient and liquid. But its smart to keep it as a temporary tool, not something you hold forever, especially if you care about censorship resistance.

[Emitdama]

I think the key is to treat Tether as a tool, not as real crypto freedom. Most people use USDT for trading, sending value fast, or as a parking spot during volatility. For that, centralization is the trade-off you accept. But if someone wants money that can't be frozen by the company, the USDT is the wrong choice, and self-custody BTC is closer to that idea.

A lot of people dont notice this until it hits them, even if the blockchain is open, the issuer can still blacklist addresses. So the risk isnt only criminals. It can be mistakes, false flags, or account issues too. So yeah, USDT will probably stay because its convenient and liquid. But its smart to keep it as a temporary tool, not something you hold forever, especially if you care about censorship resistance.

This is what it was invented for, so that you could move money around easier, and you could have a certain stable way of doing it instead of something volatile. However, over course of time, it has become something that people keep their money on, and that's not really a smart way of doing things.

I understand the entire need and why people would not want to be in cryptocurrencies at times, but the reason why they use stablecoins instead of directly fiat never made sense to me. We can actually turn our crypto into fiat, I mean what's the point if we can't, so we know we can, why not revert back to fiat instead of using stablecoins? Why would anyone keep their money in USDT for long periods of time? That's a needless risk and I never understood it.

[dansus021]

I just discussed this and lot of people talked about tether freeze I just do quick google search and found, Where do the seized funds go? The "Burn and Reissue" Process When law enforcement proves that funds are linked to crime Tether uses its "admin keys" to permanently destroy (burn) the USDT in the criminal's wallet. the second one is Tether then mints an identical amount of new USDT and sends it directly to a government-controlled wallet so basically those freeze stablecoin become a useless

[Skadiii]

Partly yes , but it also benefits them.

[Jostern]

I had a post about this on a similar topic that dkbit98 posted two days ago about it which are about the reasons Tether can freeze USDT tokens.

The three reasons Tether freeze USDT is because of law enforcement, regulatory bodies and those in connection to security incidents like exchange hack.

The freeze is done for the government to think that they are following the law so that they can have high adoption rate.

But individuals can not report scam to them. That is the reason you will see people scamming people obviously and they will have high amount of USDT that are not freezed.

The freezing of a thing will only deceive people. If you get scammed, you will be seeing the USDT on the blockchain but Tether will do nothing.

They are doing it for their personal gain in a way that they want the government to know that they are following regulations but know that those coins that are freezed are well known to the world and governments and it will likely be taken by the government or taken back by a platform that got hacked in case of security incidents.

You’re very right, I believe they are doing it for some personal reasons which is always best know unto them, I think why they freeze peoples money is because of suspicious activity of some criminal activities which is carried out by their low enforcement, sometimes this agency want to make themselves relevant in terms of showing themselves that they are absolutely doing there jobs, which I think it’s just what we call eye service.

There is a high chance that people can’t report some criminal activities when you notice one which is more reason that they take care and handle this situations themselves, I think they have to find more ways of helping out people who keeps their money with Tether should be protected the more with their money.

[o48o]

-cut-

What do you think about what Tether is doing so far? Are they doing the world a favour ? Or it's for their own good only? Because I am thinking about all these seized funds, what are they going to do with it? Since they are not the government can we say that they will do the same thing that the government is known for? ( Seizing and pocketing).

Why do you think they seize money in the first place? They are complying with AML, so they are required to communicate with law enforcement agencies and do what they say.
They aren't pocketing that money to themselves if it's frozen because of legal reasons. They are literally legally obligated to freeze the assets.

Often that freezing of assets is just needed because of automated flagging so they need to double check it, and sometimes get an authorization from authorities. Sometimes if it's not laundered, but stolen, it's confiscated by law enforcement and needs to be processed to find out how it can be tracked back to people it was stolen from. This can take for ages.

[bitgolden]

Why do you think they seize money in the first place? They are complying with AML, so they are required to communicate with law enforcement agencies and do what they say.
They aren't pocketing that money to themselves if it's frozen because of legal reasons. They are literally legally obligated to freeze the assets.

Often that freezing of assets is just needed because of automated flagging so they need to double check it, and sometimes get an authorization from authorities. Sometimes if it's not laundered, but stolen, it's confiscated by law enforcement and needs to be processed to find out how it can be tracked back to people it was stolen from. This can take for ages.

How are you so sure about it? Like this is just a company, like any other, and while they could go on for 100 years, they could also not, we will never know. You think anytime there was a company that did something and bankrupted, people knew it before hand? Hell before Enron case, everyone was investing into it like it was the best investment in the world.

So while it may look great for now, you never know these things and it could turn out to be something awful that we just didn't know or weren't aware.

[shinratensei_]

I just discussed this and lot of people talked about tether freeze I just do quick google search and found, Where do the seized funds go? The "Burn and Reissue" Process When law enforcement proves that funds are linked to crime Tether uses its "admin keys" to permanently destroy (burn) the USDT in the criminal's wallet. the second one is Tether then mints an identical amount of new USDT and sends it directly to a government-controlled wallet so basically those freeze stablecoin become a useless

So the blacklisted USDT basically become seized asset and the seized money become clean again because the old blacklisted ones are burned which implies those got sent to the burning address and there is newly minted tokens.
Honestly, that sounds pretty fair since it requires the law enforcement to prove that the money is related to illicit activity.

I wonder why don't they simply burn it and send the real hard cash to the government though.

[sana54210]

Why do you think they seize money in the first place? They are complying with AML, so they are required to communicate with law enforcement agencies and do what they say.
They aren't pocketing that money to themselves if it's frozen because of legal reasons. They are literally legally obligated to freeze the assets.

Often that freezing of assets is just needed because of automated flagging so they need to double check it, and sometimes get an authorization from authorities. Sometimes if it's not laundered, but stolen, it's confiscated by law enforcement and needs to be processed to find out how it can be tracked back to people it was stolen from. This can take for ages.

They have already been ordered to pay 40+ million in fines because of a mistake they did, and that's the only one I can remember, maybe they had more that I am not aware of . I am sure they are making a lot of revenue, having 180+ billion dollars and using that means that even on a simple bank interest they would get more, and I am sure they do more than that.

However, it proves that they are not above the law and something could happen if they do any mistakes, because it has already happened. This time it was 40+ million dollars, next time it could be 100+ million. We know they made a mistake that made them pay a fine, so there is no logic or argument that says they won't do that again, if it happened once, it may happen again.

[Orpichukwu]

Partly yes , but it also benefits them.

It benefits both parties, and they also need to do it to retain their licence from the government, but such actions possess a great threat and teach the people the danger of holding money in a centralised network. Tether and USD in the local bank are no different since they could be frozen by the entity with power once orders have been passed.

[dansus021]

~SNIP~

So the blacklisted USDT basically become seized asset and the seized money become clean again because the old blacklisted ones are burned which implies those got sent to the burning address and there is newly minted tokens.
Honestly, that sounds pretty fair since it requires the law enforcement to prove that the money is related to illicit activity.

I wonder why don't they simply burn it and send the real hard cash to the government though.

Good question tho, one of the reason why they didnt simply burn it and send real hard cash because Tether itself want the government use their product so the "real hardcash" is keep on Tether vault and generate yield. You might notice that seized bitcoin used to fuel gov bitcoin holding.

Maybe in this case tether that been seized could be used to buy more bitcoin and can be used as part of bitcoin reserve program.

[Odusko]

I just discussed this and lot of people talked about the tether freeze I just did a quick Google search and found, Where do the seized funds go? The "Burn and Reissue" Process When law enforcement proves that funds are linked to crime Tether uses its "admin keys" to permanently destroy (burn) the USDT in the criminal's wallet. The second one is Tether then mints an identical amount of new USDT and sends it directly to a government-controlled wallet so basically those frozen stablecoins become useless

Thanks for this input, burning the seized coin is the most appropriate one in most cases if I assume right, because remitting the identical one and sending it to the government still brings us to what the ops pointed to as pocketing by the government.
One thing I know is that, Tether just make the coin useless in the holder wallet, not emptying available but unusable

[o48o]

They have already been ordered to pay 40+ million in fines because of a mistake they did, and that's the only one I can remember, maybe they had more that I am not aware of . I am sure they are making a lot of revenue, having 180+ billion dollars and using that means that even on a simple bank interest they would get more, and I am sure they do more than that.

However, it proves that they are not above the law and something could happen if they do any mistakes, because it has already happened. This time it was 40+ million dollars, next time it could be 100+ million. We know they made a mistake that made them pay a fine, so there is no logic or argument that says they won't do that again, if it happened once, it may happen again.

You are referring to fine where they misled their investors? Don't get me wrong, imho they are shady, just not in a way people seem to think. If they weren't shady, they wouldn't have problems to comply with EU:s regulatory framework.

But i was just pointing out that it's unlikely they would just pocket confiscated money as they wish, because, just like you said, they have ton of legit revenue and could make it just with interest. Pocketing money that police would come after sooner or later wouldn't have great risk profit ratio and it's just impractical when there are more efficient ways to make money.

And about that 50 mil fine, comparing to settlements that many big exchanges had to do, because of their regulatory compliance issues, that's not even that much money. Most of the financial institutes that handle cryptos have huge pockets already.

[TastyChillySauce00]

This is why anything centralized is prone to manipulation since the government would be involved and anything that the government is involved in, they will always take full control of it. Tether freezes when they government asks them to do so and connect the coins to illicit activities. Tether will freeze to favor the government and keep them in the game. Avoid investing in a centralized token because you're gambling with your funds.

Stablecoin such as USDT issued by tether is by no means an investment though, just a replacement for fiat and tokenized form. It was all business through and through since the beginning. They're here to provide the stablecoin with agreed term and conditions if you used them, and they will abide by the law to avoid being punished for money laundering.
The fact that they could buy short term bonds to peg the stablecoin means complying with the government is what they are going to do from the start.

[Ishicryptic]

An angle that we should consider is the amount of funds that are frozen by USDT compared to the amount that are not frozen, if the total percentage of seized funds are very small then legitimate holders don't have any reasons to worry. I'm not so much concerned about what tether will do with frozen funds so far the funds are proven to be illegitimate, if you don't want your funds to be seized don't use USDT to hold illegitimate funds. If there are claims of legitimate USDT that tether have frozen then we can make a case that they are scammers.

If you want a total privacy for your funds you should hold them in Bitcoin which is decentralized, as long as your funds is in a centralized platform it is not totally yours.