Source: Cointelegraph
Original: “Report claims Tether's USDT blacklist execution delay allowed $78 million in suspicious funds to evade freezing”
According to a new report from blockchain compliance company AMLBot, delays in the processing of Tether wallet blacklists allowed over $78 million in illicit funds to be transferred before law enforcement actions took effect.
In a report dated May 15, 2025, AMLBot's on-chain investigation team explained that the processing of Tether's address blacklist took a considerable amount of time to take effect after being initiated on the Ethereum and Tron networks.
The report noted: “This delay stems from Tether's multi-signature contract setup on Tron and Ethereum, turning what should have been an immediate compliance action into an opportunity window for illicit actors.”
Tether's blacklist procedure is a multi-step process, where the first transaction effectively serves as a warning of the impending blacklist. Initially, a multi-signature transaction from Tether administrators submits a pending “addBlackList” call on the USDT-TRC20 contract.
This results in the target address being publicly “submitted” as a blacklist candidate. Subsequently, a second multi-signature transaction confirms the submission, ultimately issuing an “AddedBlackList” event that makes the blacklist effective.
In an example shared with Cointelegraph, an on-chain transaction submitted a Tron address as a blacklist candidate at 11:10:12 AM UTC. However, the actual execution of the second transaction did not occur until 11:54:51 AM UTC on the same day, resulting in a 44-minute delay.
In practice, this delay may be perceived as a notification by USDt holders about to be blacklisted, prompting them to transfer assets to avoid freezing. The report stated:
“The delay between the freeze request and its on-chain execution creates a critical attack window, allowing malicious actors to preemptively execute, transfer, or launder funds before the freeze takes effect.”
The report claimed: “For blockchain-savvy attackers, these delays are a golden opportunity.” By tracking Tether's calls in real-time, scammers can immediately learn that their address has been targeted. When Cointelegraph inquired whether this delay was due to technical limitations or the actions of multi-signature wallet key holders, AMLBot researchers stated that without knowledge of Tether's internal procedures, they could not determine the cause.
As of the time of publication, Tether had not responded to Cointelegraph's request for comment.
AMLBot claimed that its data showed that during the delay period between the two transactions on the Ethereum blockchain, over $28.5 million in USDT was withdrawn. This amount that evaded freezing occurred between November 28, 2017, and May 12, 2025. The average amount transferred during the delay was over $365,000.
Similarly, it was reported that during the freeze delay window on the Tron blockchain, $49.6 million was withdrawn, bringing the total amount on Ethereum and Tron to $78.1 million. According to AMLBot, taking advantage of this delay on Tron is not uncommon:
“On the Tron blockchain, 170 out of 3,480 wallets (4.88%) utilized this delay before being blacklisted. Each wallet made 2 to 3 transfers during the delay, with an average withdrawal amount of $291,970.”
Tether had previously promoted its ability to freeze assets as a compliance feature. In 2024, Tether, Tron, and analytics firm TRM Labs collaborated to freeze over $126 million in USDT related to illegal activities.
Nevertheless, AMLBot's report raised questions about the effectiveness and speed of these enforcement actions.
Related: After adding $1 billion in minting, Tron’s USDT supply will surpass Ethereum’s.
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