Tether Freezes $47M USDT Stake Held by FTX

Tether, the issuer behind the No. 1 U.S. dollar-backed stablecoin, USDT, froze almost $47M worth of USDT held by FTX exchange on the Tron blockchain.

Block explorer Tronscan has traced the address with frozen assets to FTX.

Tether took the action at the behest of an unnamed law enforcement agency. t.”We are starting to receive requests from LE to temporarily freeze assets while an investigation occurs” a Tether executive told CoinDesk.

Law Enforcement

In August, Tether said that it will not freeze any USDT unless asked to do so by the law enforcement agencies.

The news comes a day after reports that U.S. Department of Justice and the U.S. rSecurities and Exchange Commissionare investigating FTX and its client account practices. On Thursday, USDT, the leading stablecoin slipped its peg briefly and fell to 96 cents. It regained its peg and is at $1.01 in midday trading Eastern time.

Trading Activities

Investors speculate that USDT slipped its peg because of pressure from trading activities connected to Alameda Research, the crypto hedge fund controlled by Sam Bankman-Fried and linked to FTX. Investors on Twitter said Alameda may be swapping out their USDT for USDC, which led to heavy selling.

In addition, the USDT supply on Compound Finance has been shrinking rapidly. Its supply decreased by $30M in the past 24 hours, with utilization ratio spiking up to 92.76%.

Tether CTO Paolo Ardoino saidhe stablecoin issuer has processed approximately $700M worth of USDT redemptions in the past 24 hours.

Tron DAO reserve said that it will purchase USDT worth $300M from the open market.