A delay in Tether’s wallet blacklisting system allowed over $78 million worth of USDT to be moved by hackers before the wallets were frozen, according to a new report from blockchain compliance firm AMLBot.
The report was released on May 15 and looked at transactions on both Ethereum and Tron blockchains. It said the delay in blocking addresses gave criminals enough time to quickly move their tokens before action was taken.
Tether’s blacklisting process does not happen instantly. It uses a two-step method that begins with a public “warning” on the blockchain, followed by a second step that actually freezes the wallet.
AMLBot explained that this time gap creates a perfect window for anyone watching closely to move their funds out fast. In one case shared, a warning was posted at 11:10:12 UTC. The freeze didn’t happen until 11:54:51 UTC. It took nearly 45 minutes for the wallet owner to react.
“This delay originates from Tether’s multisignature contract setup on both Tron and Ethereum, transforming what should be an immediate compliance action into a window of opportunity for illicit actors,” AMLBot said in its report.
The delay allowed $28.5 million to be withdrawn on Ethereum and $49.6 million on Tron. These amounts were moved between November 2017 and May 2025. AMLBot said that 170 out of 3,480 wallets on Tron used this lag to their advantage, each transferring an average of $291,970 before being blocked. The report noted that hackers who understand how Tether works can track its blacklist signals live and act fast.
“For blockchain-savvy attackers, these delays are golden,” the report stated. When asked whether the lag is a tech problem or a delay in signing off by Tether’s team, AMLBot said they could not confirm without knowing Tether’s internal operations.
Tether responded in a statement: “While any delay in enforcement should be examined, the idea that this represents a systemic loophole is both misleading and lacking perspective.” The company said it works with over 255 law enforcement agencies across 55 countries.
It even claimed to have frozen more than $2.7 billion in USDT so far. Tether added, “We are actively refining this process to work to eliminate any potential advantage for bad actors.”
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