Tether Freeze Process Exposed as Vulnerable to Illicit Activity

An investigation by FlashRescue found that Tether's freeze process has a significant delay between issuing a lock proposal and its confirmation on the Ethereum and TRON networks, lasting around 2 hours and 16 minutes. This lag allows flagged funds to be transferred before the freeze takes effect.

Data analysis revealed that in some cases, high-risk actors were able to move funds just 14 minutes after the formal proposal was submitted, successfully withdrawing $20.4 million USDT from 60 tracked addresses before the freeze command took hold.

In another instance, 113 addresses linked to suspicious activity completed partial withdrawals of their balances, moving nearly an additional $35.5 million USDT before being disabled.