Tether Freezes FTX USDT At The Request of Law Enforcement

By
Vinamrata Chaturvedi
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Full Bio

Vinamrata Chaturvedi is a former senior editor of blockchain and cryptocurrency at Investopedia. She has been covering crypto, economy, politics, social issues, and gender-related topics since 2013. She is a board member of the ACJR (The Association of Cryptocurrency Journalists And Researchers) network, and her work has appeared on StockTwits, CoinDesk, CoinMarketCap, and Bitcoin Magazine.

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Published November 10, 2022
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Tether, a stablecoin issuer, froze $46 million of USDT held by FTX at the request of law enforcement.

Key Takeaways

  • Tron block explorer confirmed that the frozen wallets worth $46 million belong to FTX. 
  • Amid its connection with FTX and Alameda Research, Tether clarified that it is unexposed to them.

Tether Loses Its Peg To The U.S. Dollar

In an interview with CoinDesk, a Tether spokesperson that assets are temporarily frozen ''while an investigation occurs.'' Tron block explorer confirmed that the frozen wallets belong to FTX, the crypto exchange going through a liquidity crisis at the moment.

The news follows Tether (USDT) losing its peg to the U.S. dollar. On Thursday, the world's largest stablecoin dipped as much as 4% to around 96 cents.

Additionally, Tether Global is rumored to have been connected to FTX and Alameda Research to which the company clarified on its website: "Tether has nothing to do with FTX or Alameda Research. Tether is completely unexposed to Alameda Research or FTX’’.

Stabelcoin Not So Stable 

A stablecoin is a cryptocurrency whose value is pegged to another currency, commodity, or financial instrument, so it doesn't fluctuate in value. However, the recent turmoil at FTX has shaken the whole crypto world. 

"During periods of market volatility, the trading price for USDT that is quoted on exchanges may fluctuate. This happens because there is more demand for liquidity than exists on that exchange's order books and has nothing to do with Tether's ability to hold its peg nor the value or makeup of its reserves," Tether posted on its website.

The Bottom Line

The turmoil at FTX and the instability of USDT are sudden and have shaken investors' confidence. If it continues to be the same, perhaps the repercussions will surpass those caused by the Terra crash.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

  1. CoinDesk. ''Tether Freezes $46M of USDT Held by FTX Following Law-Enforcement Request''

  2. Tronscan. ''FTX''

  3. CoinDesk. ''Tether Freezes $46M of USDT Held by FTX Following Law-Enforcement Request''

  4. CoinMarketCap. ''Tether''

  5. Tether. ‘‘FTX, Black Swans, and Tether's Continued Stability’’

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