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Update (May 15 at 3:10 pm UTC): This article has been updated to include comments from Tether. A lag in Tether’s wallet blacklisting process allowed over $78 million in illicit funds to be moved before enforcement actions took effect, according to a new report from blockchain compliance company AMLBot. Tether’s address blacklisting becomes effective only after a considerable delay from when the process is initiated on Ethereum and Tron, according the report published May 15. “This delay originates from Tether’s multisignature contract setup on both Tron and Ethereum, transforming what should be an immediate compliance action into a window of opportunity for illicit actors,“ the report reads. Tether’s blacklisting procedure is a multi-step process with a first transaction effectively warning of the upcoming blacklisting. First, a Tether administrator multisignature transaction submits a pending call to “addBlackList” on the USDT-TRC20 contract. This results in a public “submission” of the target address as a blacklist candidate. This is followed by a second multisignature transaction confirming the submission, resulting in an “AddedBlackList” emission, making the blacklisting effective. Related: Tether, Tron and TRM Labs jointly froze $126M USDT in 2024 A warning on incoming blacklisting In one example shared with Cointelegraph, an onchain transaction submitting a Tron address as a blacklist candidate took place at 11:10:12 UTC. The second transaction that actually enforced the action did not occur until 11:54:51 UTC on the same day, a 44-minute delay. In practice, this delay can be treated by owners of USDt about to be blacklisted as a notice to move their assets to avoid them being frozen. The report stated: “This delay between a freeze request and its on-chain execution creates a critical attack window, allowing malicious actors to front-run enforcement and move or launder funds before the freeze takes effect.“ Example of USDt blacklisting transactions.…

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Filed under: News - @ May 16, 2025 7:22 am