Darcy, a blockchain asset-recovery investigator and FlashRescue co-founder, revealed that targeted funds exited a wallet while Tether was in the process of freezing the address, raising quest
Darcy, a blockchain asset-recovery investigator and FlashRescue co-founder, revealed that targeted funds exited a wallet while Tether was in the process of freezing the address, raising questions about the stablecoin issuer’s freeze procedures.
Circle, Tether’s main rival and the issuer of USDC, has faced ongoing criticism in 2026 for acting too infrequently when it comes to freezing flagged or stolen assets. Now, Tether, praised for its speed and effectiveness compared to Circle, is under fire for the actual efficiency of its freezing process.
Darcy, who publicly shares updates as @DarcyAri and works in joint investigations with partner companies, described a recent case in which funds from a flagged wallet were transferred out during the freeze process. This time gap allowed some assets to escape before the restriction took effect, reducing the total sum that could ultimately be frozen.
The stablecoin issuer has long been acknowledged for its willingness to act quickly against suspicious transactions, especially compared to Circle. However, this latest episode suggests that even Tether’s system has a critical vulnerability: a measurable delay between the moment a freeze is proposed and its execution on the blockchain.
An analysis of 2,955 Tether freeze events across Ethereum and TRON revealed that the average interval between a freeze proposal and its execution is 2 hours, 16 minutes, and 15 seconds. The main technical limitation lies in the requirement for multisignature confirmations, which slow down the freeze process. As a result, monitored wallets can sometimes move funds out in this window, escaping the freeze.
The data shows that at least 60 addresses were able to completely empty their USDT holdings—totaling $20.4 million—between the proposal and the actual freeze. In these cases, transfers typically began about 14 minutes after the freeze was initiated, with most of the assets moved within the first 15 minutes.
Another 113 addresses succeeded in sending out a portion of their funds prior to the freeze, amounting to approximately $35.5 million. One highly visible incident came in July, when Tether responded to US Treasury sanctions on Iran’s central bank and certain TRON wallets. Although Tether ultimately froze $131 million in sanctioned assets, around $34 million had already been withdrawn ahead of the block’s confirmation.
Tether has stated its process involves direct coordination with investigators during active cases rather than after funds are dispersed. The firm said it has collaborated with more than 340 law enforcement agencies in 65 countries on over 2,300 cases, assisting in the freeze of assets exceeding $4.4 billion.
Circle, for its part, often cites legal constraints for its measured approach. CEO Jeremy Allaire explained in Seoul that Circle only acts under direct orders from law enforcement or courts, leading to lengthy delays and missed opportunities to halt the movement of illicit funds. On-chain analyst ZachXBT has identified more than a dozen major cases since 2022, including the $280 million Drift Protocol exploit linked to North Korean actors, in which $420 million in unauthorized assets proceeded unimpeded as Circle did not enforce freezes in time.
Wisconsin prosecutors even filed a criminal complaint against Circle after the company stated it could not comply with a legal warrant to return USDC to a scam victim, highlighting unresolved tensions with regulatory authorities.
While the average gap in Tether’s execution allowed sophisticated actors to anticipate and circumvent restrictions, the total magnitude of lost funds remains just a fraction of the total assets frozen. The company’s largest Iran-related actions, including a $344 million lock in April and other coordinated operations, have brought its total for Iran-linked freezes to around $475 million. Investigators like Darcy have also noted that once stolen crypto is mixed with unrelated funds at new addresses, recovering it becomes extremely difficult because Tether rarely freezes pools it cannot clearly link to illicit activity.
Given these operational delays and the growing sophistication of illicit actors, market participants are emphasizing the need for smarter alerts, continuous tracking, and reliable notifications. Tools such as CryptoAppsy now offer portfolio integration, real-time prices, and detailed charts alongside multi-currency management. With instant price alert functions, customizable news filtering, and discovery features for newly listed altcoins, CryptoAppsy enables users to react faster to market changes and monitor critical macroeconomic events, such as Fed interest rate shifts, without the friction of account sign-ups. Such platforms are becoming especially valuable for both individual investors and asset recovery specialists who need to stay ahead of evolving risks.
Analysis revealed that at least 60 monitored addresses succeeded in transferring out all their USDT before the freeze took effect, while another 113 partially emptied their wallets, showcasing the limitations of current freeze mechanisms.
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