USDT Issuer Tether Under Fire for Multi-Sig Lag Enabling Crypto Laundering
The post USDT Issuer Tether Under Fire for Multi-Sig Lag Enabling Crypto Laundering appeared on BitcoinEthereumNews.com.
A new report from AMLBot has revealed that a delay in Tether’s fund-freezing mechanism has allowed criminals to exploit the system and move over $78 million in USDT across Ethereum and Tron since 2017. Tether’s Freeze Mechanism and Its Vulnerabilities AMLBot, a blockchain forensics firm, has reported that Tether’s process for freezing USDT linked to criminal activity contains a delay that criminals have exploited. The firm found that the process of blacklisting addresses involves a multi-signature setup, which creates a delay between a freeze request and its execution on the blockchain. This process requires multiple parties to sign the freeze transaction, which can take time to complete. During this time window, some wallets have moved funds before the freeze became active. AMLBot called this period a “critical window” for illicit actors. PeckShield, a blockchain security firm, reviewed the report and confirmed the delay. “It does not necessarily indicate a problem with the contract itself,” a spokesperson said. “Rather, it is an operational issue that creates a time window between when the blacklist transaction is submitted and when it is executed.” $78 Million Moved Through Ethereum and Tron AMLBot’s findings showed that bad actors withdrew $49.6 million on Tron and $28.5 million on Ethereum through this loophole. In one example, there was a 44-minute gap between the freeze request and its confirmation on the Tron network. This gave wallets enough time to make up to three transactions before being frozen. According to AMLBot, 4.88% of all blacklisted wallets on Tron were able to exploit this lag. Although smaller in volume, Ethereum-based wallets also took advantage of this operational gap. Since 2017, the total amount of USDT moved by such wallets reached $78.1 million. AMLBot believes some actors may be using tools to monitor freeze requests. These tools scan for specific smart…
Filed under: News - @ May 16, 2025 10:28 am