Tether Freezes FTX USDT as Dollar Peg Wobbles

Tether froze USDT belonging to FTX as speculation spread over whether its sister organization was shorting the stablecoin


Source: Shutterstock


Crypto markets are stressed from the ongoing FTX scandal, causing the dollar peg of top stablecoin tether (USDT) to wobble on major platforms, including Binance.

And just as USDT regained footing after falling as low as $0.9381 on Kraken, Tether moved to freeze $46 million USDT held by FTX following a request from law enforcement.

The move comes one day after the U.S. Securities and Exchange Commission and Justice Department began investigating FTX over its liquidity crisis. 

FTX’s frozen USDT exists on the Tron blockchain, which handles more than half of all USDT in existence. The move was first reported by CoinDesk.

Tether regularly freezes USDT and blacklists addresses for various reasons, including on request from law enforcement following hacks and other illicit activities.

While traders and other market watchers eyed tether’s peg carefully, Justin Sun, Tron’s controversial founder, said his team were supposedly “working around the clock to avert further deterioration” of the crypto market.

Like other stablecoins, tether’s peg is not exactly constant. It shifts up and down — usually very slightly — depending on the liquidity of its markets. If traders en masse sell their USDT for another asset, say when there’s been a big dip in the price of bitcoin, tethers can temporarily fall below their intended dollar value.

The price of USDT temporarily jumped against BUSD on Binance and dropped against the US dollar on Kraken

And so, part of Sun’s supposed plan hinged on the so-called TRON DAO Reserve. He pledged to first purchase $1 billion worth of USDT followed by an additional $300 million USDT on the open market. The reason being to “safeguard the overall blockchain industry and crypto market.”

It’s unclear whether any of those buys actually happened, but USDT has now reclaimed its peg on major markets. The stablecoin’s market dominance, which measures its size compared to the entire digital asset space, has also shot up in recent days.

Meanwhile, speculation ran rampant that Alameda Research may be shorting USDT via decentralized finance protocols Aave and Curve. 

Blockworks has reached out to analytics units to confirm whether that’s the case, while embattled FTX CEO Sam Bankman-Fried this morning effectively denied that he’s involved in the shorts on Twitter.

Nevertheless, Paolo Ardoino, Tether chief technology officer, tweeted that there are “no issues” and that “we keep going.”

Ardoino said Tether has processed $700 million in USDT redemptions for cash over the past 24 hours — a disclosure no doubt aimed at shoring up market confidence in the stablecoin’s dollar-value moving forward.

David Canellis contributed reporting.

Don’t miss the next big story – join our free daily newsletter.


Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Icon.png


Osmosis thrived in H2 2023 on the back of increased DeFi activity deriving from recently launched Cosmos-related projects and better market conditions. With new value accrual mechanisms for the native token, Osmosis is well-positioned to continue its strong performance in 2024.



The settlement ends the legal battle over eth.link, a domain once owned by imprisoned developer Virgil Griffith


TBC President Lee Bratcher told Blockworks he’s “confident” about the Council’s case against the DOE


The Monday trading volumes total passes the previous high mark set on the fund’s first day of trading nearly seven weeks ago


The hearings are expected to last for a couple of days as the court hears arguments for and against the bankruptcy plan proposed by Genesis


Equities were mixed toward the end of Monday’s session while cryptocurrencies continued their rally


Though the opposing flow trend is likely to slow over time, industry watchers note, bitcoin fund assets could one day eclipse the $90 billion gold ETF space