Stablecoin Freeze Case Analysis: Beware of the Threat of Terrorist Financing

Bitrace monitoring data shows that the number of on-chain addresses frozen in 2025 reached a record 3,958, exceeding the total of 3,199 in the previous four years. This article aims to warn the industry of this financial threat through the analysis of specific freezing cases.

Author: Bitrace

Restricting the operational permissions of specific blockchain addresses for specific stablecoins is a common method for stablecoin issuers to cooperate with law enforcement. Over the past few years, stablecoin issuers Tether and Circle have established mature communication and cooperation channels with law enforcement agencies worldwide, effectively deterring criminal entities and individuals from maliciously using cryptocurrencies for illegal activities.

Bitrace monitoring data shows that the number of on-chain addresses frozen in 2025 reached a record 3,958, exceeding the total of 3,199 in the previous four years. This article aims to warn the industry of this financial threat through the analysis of specific freezing cases.

Analysis of the first TEDA address blacklisting in 2026

On January 1, 2026, USDT issuer Tether blacklisted six Tron and Ethereum addresses on-chain. Tracing the funds in one of them, TKWBiXWm8fNMBxBLaEXnQM1TPDbCLbZC7i, revealed that this collaborative action was related to the National Bureau for Counter Terror Financing of Israel.

Its main source of funds includes several previously blacklisted blockchain addresses. According to the NBCTF website, four of these addresses appear in the Seizures of Cryptocurrency list as ASO 41/25, ASO 50/25, and ASO 51/25 addresses, and were frozen by Tether between August 4 and September 30, 2025.

More detailed administrative seizure orders revealed that these addresses were all linked to terrorist financing.

War spurs a wave of sanctions and freezes

As Israel's military conflict with its neighbors enters its third year, the offensive has extended to the blockchain.

Bitrace monitoring data shows that between 2021 and 2025, the Israeli government sanctioned a total of 1,687 blockchain addresses or exchange accounts. Almost all of these executive orders occurred during the war from 2023 to 2025, and the targets of the sanctions were mainly terrorist entities or their financing channels.

Further observation of some stablecoin addresses reveals that the addresses were generally frozen before the sanctions were announced, indicating that Tether had already intervened in law enforcement cooperation activities at an earlier time.

Clearly, real-world regional conflicts will merge with on-chain warfare in the future.

Be vigilant against the threat of terrorist financing

In our past investigations, we have noted that cryptocurrency-based terrorist financing is often linked to industry infrastructure such as cross-chain bridges, centralized exchanges, and crypto payment platforms. Large amounts of illicit funds are transferred and stored through these channels, posing compliance risks to entities within the industry.

Taking these sanctioned addresses as an example, a further analysis of their upstream funding sources reveals a large number of small transfers from centralized exchanges, which are then aggregated and transferred in batches to specific addresses and exchange accounts.

For the risk control department of the exchange, it is important to pay close attention to the users who have been tainted by these funds, and to prevent legal investigations and potential compliance challenges against the platform due to fund taint.

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