The Delay in Tether’s Blacklisting Process: A Window of Opportunity for Illicit Fund Movements
Understanding the Blacklisting Delay
The process of blacklisting a wallet on Tether involves multiple steps, which inherently introduces a delay between the initiation and the actual enforcement of the blacklist. Initially, a Tether administrator submits a multisignature transaction to “addBlackList” on the USDT-TRC20 contract, marking the beginning of the blacklisting process. This submission publicly identifies the target address as a candidate for blacklisting.
However, it is the second multisignature transaction that confirms this submission and triggers the “AddedBlackList” emission, thereby making the blacklisting effective. According to the AMLBot report, this procedural delay can extend up to 44 minutes, as evidenced in one instance where the enforcement action lagged the initial submission significantly.
The Impact of the Delay
This has happened frequently, according to the data. The report highlights that between November 2017 and May 2025, actors moved over $28.5 million in USDT on the Ethereum blockchain during delay windows. On the Tron blockchain, they moved an even larger amount—$49.6 million—before blacklisting could take effect.
This has happened frequently, according to the data. The report highlights that between November 2017 and May 2025, actors moved over $28.5 million in USDT on the Ethereum blockchain during delay windows. On the Tron blockchain, they moved an even larger amount—$49.6 million—before blacklisting could take effect.
Broader Implications for Blockchain Security
The findings from AMLBot not only spotlight a significant oversight in Tether’s operational protocols but also raise broader questions about the effectiveness of current regulatory and compliance measures in the blockchain ecosystem. While Tether has previously underscored its asset freezing capability as a compliance strength, this report suggests that the actual efficacy of such measures may be compromised by operational delays.
In 2024, a collaborative effort between Tether, Tron, and TRM Labs led to the freezing of over $126 million in USDT linked to illicit activities, showcasing the potential of coordinated action in enhancing security. However, Critical Delays in Tether’s blacklisting process, as highlighted by AMLBot, necessitate a reevaluation of these procedures to close the gaps exploited by malicious actors.
Looking Forward
As the digital asset landscape continues to evolve, the need for robust, real-time compliance mechanisms becomes increasingly critical. The insights provided by AMLBot not only serve as a call to action for Tether but also for other entities within the blockchain space to reassess and fortify their operational and security protocols.
For more insights into blockchain security and compliance, explore our detailed analysis on the rising demand for crypto lawyers post-regulation and the role of blockchain in reshaping financial trends in 2024.
As the digital finance world grapples with these challenges, the role of compliance and security in blockchain will undoubtedly be a pivotal theme in shaping the future of cryptocurrencies and digital assets.
