Tether, the issuer of the world’s largest stablecoin, has been commended by the U.S. Department of Justice (DOJ) for assisting in a major enforcement operation. The collaboration led to the seizure of approximately $225 million in USDT tied to a global “pig butchering” scam, a large-scale fraud scheme that used sophisticated crypto tactics to deceive victims.

With Tether’s support, the funds were frozen through blockchain tracing tools that helped restrict access to the illicit assets. The company worked closely with law enforcement throughout the operation, highlighting growing cooperation between crypto firms and authorities in combating digital asset-related crimes.

Tether’s $2.7B USDT Crackdown

Tether stated that the seizure aligns with its mission to promote compliance, transparency, and safety in the digital asset space. The company noted it has already frozen over $2.7 billion in USDT linked to suspicious activity. These efforts are supported by real-time blockchain monitoring tools and partnerships with more than 255 enforcement agencies across over 55 countries.

As part of these efforts, the stablecoin issuer has taken action in several high-profile cases. In March 2025, it assisted the U.S. Secret Service in freezing $23 million in USDT tied to the sanctioned Russian exchange Garantex. It also partnered with TRM Labs, the Tron blockchain, and Spanish authorities to disrupt over $100 million in illicit funds.

Commenting on these initiatives, CEO Paolo Ardoino emphasized Tether’s commitment to protecting users and maintaining regulatory standards. He added that working with the DOJ highlights the company’s proactive role in preventing the misuse of stablecoins and promoting transparency in the crypto sector.

Tether Supports GENIUS Act Compliance Push

As the most widely used U.S. dollar-pegged stablecoin, Tether has long been at the center of regulatory debates. In response, the company has strengthened its compliance efforts, especially as the U.S. advances the GENIUS Act.

Recently approved by Congress, the legislation requires all dollar-based stablecoin issuers to implement systems capable of freezing funds linked to illegal activity. Tether has expressed its readiness to comply, calling the measure a key step toward ensuring the long-term security and credibility of stablecoins.

The US Treasury Department imposed sanctions on Funnull Technology Inc., a Philippines-based tech firm accused of facilitating hundreds of thousands of online crypto investment scams known as “pig butchering,” which defrauded American victims of over $200 million.

The Office of Foreign Assets Control (OFAC) also designated Liu Lizhi, a Chinese national and administrator of Funnull, for his role in overseeing operations that provided critical infrastructure for the scams, including IP address leasing, domain generation, and web hosting services used by cybercriminals.

Deputy Treasury Secretary Michael Faulkender said:

“Today’s action underscores our focus on disrupting the criminal enterprises, like Funnull, that enable these cyber scams and deprive Americans of their hard-earned savings.”

Funnull is linked to the majority of virtual currency scam websites reported to the FBI, with US victims averaging losses of more than $150,000 each. Officials say many of these crimes go unreported, suggesting the true toll is likely far greater.

Sophisticated scams

According to the May 29 release, the firm operated by bulk-purchasing IP addresses from global cloud providers and leasing them to scammers, who used them to host investment scam websites that mimic legitimate trading platforms.

Funnull also offered tools like domain generation algorithms (DGAs) and pre-built website templates to make these operations appear more credible and evade takedowns.

According to Treasury officials, Funnull even embedded malicious code into legitimate websites, rerouting users to fraudulent investment pages and online gambling sites. Some of these redirection schemes have been tied to Chinese money laundering operations.

Liu Lizhi allegedly maintained detailed documentation of Funnull’s personnel, tracking their performance and task assignments, which included allocating domains to support phishing, gambling, and crypto fraud platforms.

Pig butchering scams, first spotlighted by the Treasury’s Financial Crimes Enforcement Network (FinCEN) in 2023, are largely operated by Southeast Asian crime syndicates using trafficked labor.

Scammers use fake identities and emotionally manipulative storylines to build trust with victims, eventually persuading them to invest through fraudulent crypto platforms. Once the victim refuses to contribute more, the scammers cut off contact and disappear with the funds.

These schemes have evolved in sophistication, now often involving custom-built websites that appear legitimate and display fake investment returns. Funnull’s technology, including domain-spamming software and rapid infrastructure switching, enabled scammers to scale and persist across jurisdictions despite enforcement efforts.

Dismantling infrastructure behind crypto fraud

The May 29 designation was issued under Executive Order 13694, as amended by E.O. 14144, which targets foreign cyber-enabled activities that threaten US national security and economic stability.

All of the firm’s property and interests in property within US jurisdiction are now blocked, and Americans are barred from engaging in transactions with them.

The move was coordinated with the FBI, which also issued a cybersecurity advisory outlining Funnull’s technical infrastructure and urging the public to report suspected scam activity via its Internet Crime Complaint Center (IC3).

Treasury officials emphasized that these sanctions aim to penalize offenders and signal the US commitment to maintaining a secure and legitimate digital asset ecosystem.

Entities violating these sanctions face potential civil or criminal penalties. OFAC reminded financial institutions and others that transactions with designated individuals or entities may expose them to enforcement actions under strict liability standards.

While the sanctions are a significant step, OFAC noted that the goal is not merely punishment but to incentivize behavioral change and offer a pathway for removal from the Specially Designated Nationals (SDN) list if compliance is demonstrated.

The action marks a continued escalation in the US government’s crackdown on cyber-enabled financial fraud and underscores its intent to hold digital crime enablers accountable.

A disturbing trend emerges in the demographic profile of pig butchering scam victims. While older adults have historically been the main targets of financial fraud, these scams now focus on younger, tech-literate individuals.

The latest data reveals that those aged 30 to 49 represent the majority of reported cases.

Pig Butchering Scams

A 2024 study by Cyvers analyzed 150 major crypto platforms, including exchanges, payment service providers, and banks, with a focus on the Ethereum blockchain. The research uncovered over 200,000 cases of Pig Butchering scams, which resulted in more than $5.5 billion stolen across 1.15 million fraudulent transactions.

The impact of these scams varied significantly among platforms. While some exchanges and service providers saw extensive fraud, others reported minimal cases. Among the ten most affected platforms were three of the five largest crypto exchanges by trading volume, a crypto-friendly bank, and an institutional trading platform.

The study demonstrated the scale of Pig Butchering fraud and the vulnerability of both centralized and decentralized financial systems.

A significant portion of funds stolen in Pig Butchering scams is concentrated in a small number of cryptocurrencies. While fraudsters utilize various digital assets, Cyvers found that certain high-liquidity coins are preferred for illicit transactions. These assets are targeted due to their greater acceptance and ease of laundering.

Stablecoins, particularly those with a strong market presence, are frequently used in scams due to their stability and seamless conversion. Additionally, major smart contract platforms experience high levels of fraudulent activity due to their dominance in decentralized finance (DeFi) and large transaction volumes.

USDT and Ethereum each account for 45% of stolen funds, while USDC and DAI represent 1.7% and 1.3%, respectively.

To evade detection, scammers leverage multiple micro-transactions to build victim trust and move funds across several wallets before reaching major exchanges. They use both centralized and decentralized protocols for laundering.

Additionally, cross-chain bridging allows them to obscure transaction trails, often swapping assets for privacy coins such as Monero. Meanwhile, cashing out occurs through OTC markets, money mules, and gift card conversions, which makes tracking and recovery difficult.

From Romance to Ruin

Pig Butchering now accounts for over 60% of such cases. It is a highly adaptable scam that blends elements of romance fraud, investment scams, and Ponzi schemes. Unlike traditional rug pulls or quick deception tactics, Pig Butchering relies on long-term psychological manipulation. Scammers build trust through emotional connections, similar to romance scams, before luring victims into fraudulent investments.

These schemes promise high returns and mimic Ponzi structures, before ultimately draining victims’ funds. This hybrid nature makes Pig Butchering particularly devastating and enables scammers to exploit victims on both emotional and financial levels.