USDT’s $78 Million Laundering Loophole Exposed: Tether’s Freezing Delay Under Scrutiny
Blockchain forensics firm AMLBot has revealed a significant vulnerability in Tether’s USDT freezing mechanism, dubbed the ’laundering loophole,’ which has allowed malicious actors to exploit delays in the blacklisting process. Since 2017, over $78 million in USDT has been siphoned from ethereum and Tron networks during the gap between freeze requests and on-chain execution. This raises critical questions about the efficacy of Tether’s anti-money laundering (AML) protocols and the stability of the world’s largest stablecoin.
$78 Million Lost to ‘Laundering Loophole’ in Tether Freezing Method Since 2017
Blockchain forensics firm AMLBot uncovered a critical delay in Tether’s USDT stablecoin freezing mechanism, allowing malicious actors to exploit a ’laundering loophole.’ Between the request to freeze an address and its on-chain execution, over $78 million was siphoned from Ethereum and Tron networks since 2017.
Tether’s blacklisting protocol, designed to immobilize assets linked to illicit activity, suffers from operational latency. Exchanges often announce freezes before implementation, creating a window for fund movement. AMLBot’s report highlights this systemic vulnerability in stablecoin governance.
The findings underscore growing pains in cryptocurrency compliance frameworks. While Tether maintains one of the most active address freezing systems in digital assets, execution gaps reveal challenges in synchronizing off-chain decisions with on-chain enforcement across decentralized networks.
Polygon Token Faces Bearish Technical Pattern Despite DeFi and Stablecoin Growth
Polygon’s native token (POL) is signaling potential downside risks after forming a bearish technical pattern, currently trading at $0.2355—below this week’s high of $0.2765. The warning comes despite robust growth in decentralized finance activity and stablecoin adoption across the network.
Stablecoin supply on Polygon has rebounded to $1.98 billion after hitting a year-to-date low of $1.67 billion, according to DeFi Llama. Messari’s quarterly report highlights a 23% surge in stablecoin supply and 30% growth in active wallets during Q1. DAI dominates with 47% market share, followed by USDC (31%) and USDT (13%).
The network continues to position itself as a payment rail for digital assets, with stablecoins serving as the foundation for its "Venmo LAYER for crypto" proposition. This fundamental strength contrasts with the token’s technical weakness, creating market uncertainty.
Telegram Shuts Down World’s Largest Black Market with Over $35Bn in USDT Transactions
Haowang Guarantee, an illicit online marketplace responsible for over $35 billion in USDT transactions, has ceased operations after Telegram blocked its channels and groups on May 13, 2025. The platform, described as the largest-ever black market, announced its shutdown following decisive action by the messaging app.
Elliptic, a blockchain analytics firm, played a key role in the takedown of Haowang Guarantee and its affiliates, Huione Guarantee and Xinbi Guarantee. Thousands of Telegram accounts linked to these criminal enterprises were closed in recent weeks, marking a significant blow to darknet commerce.
The crackdown highlights growing scrutiny of cryptocurrency’s role in illicit finance. While no specific coins beyond USDT were named in connection with the operation, the event underscores the need for continued vigilance across all digital asset networks.
