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And Why Bitcoin Remains the Only Truly Independent Asset

With a market capitalization of around $186 billion, USDT has firmly established itself as the digital dollar for millions of users worldwide. However, behind this coin lies a mechanism that allows the issuer to freeze funds at any address at any time—and this capability is used on an ongoing basis.

In just the last six months, Tether has blacklisted 2,362 addresses on the Ethereum and TRON networks, blocking $1.64 billion on them. Formally, such measures are aimed at hackers and scammers, but the very existence of this function means that even on a non-custodial wallet, the holder is not the full owner of their tokens.

Together with the team behind the Bitcoin mixer Mixer.Money, we analyze how the USDT freeze mechanism works, why ordinary users risk being affected by it, and how holding funds in stablecoins fundamentally differs from holding Bitcoin.

The Ardoino List: How Blocking Works

USDT is a centralized stablecoin, and Tether does not hide this. Company CEO Paolo Ardoino openly emphasizes this feature, contrasting the token with supposedly decentralized projects. The ability to block an address and forcibly destroy tokens is embedded in Tether's smart contracts on the Ethereum (ERC-20), TRON (TRC-20), Solana, and other networks. The function names may vary, but the essence is the same:

• addBlackList — the address owner loses the ability to send USDT; any transfer is rejected at the contract level. The address remains active for receiving new USDT and managing the native coin of the network (ETH, TRX, SOL);
• removeBlackList — restores the ability to transfer tokens;
• destroyBlackFunds — irreversibly burns USDT at the blocked address. The owner will no longer be able to recover them.

After burning, Tether can issue an equivalent volume of tokens at another address. Re-issuance is used when funds are returned to victims or transferred to wallets under law enforcement control. According to BlockSec, it takes an average of about two days between issuing a blocking order and its execution on the network. The status of an address can be checked using a special checker.

Promissory Note vs. Digital Gold

Behind every blocking is an external request. Tether freezes an address based on a single verified request from law enforcement—without warning the holder or providing an appeal procedure before the block. The user learns about the restriction after the fact. The T3 Financial Crime Unit (T3 FCU)—a joint project of Tether, TRON, and TRM Labs—executes the blocking within 24 hours. Since its creation in September 2024, the alliance had frozen over $450 million across 23 jurisdictions by May 2026.

Stablecoins themselves are identified for blocking by on-chain analytics companies like Chainalysis, Elliptic, and TRM Labs. They assign risk levels to wallets and link them together. If an address receives a high risk score, AML systems also raise the assessment for wallets connected to it. Sometimes, random users whose coins once passed through a recognized "dirty" address end up under restrictions.

USDT and USDC are debt obligations of a centralized issuer. The issuer retains control at the contract level: blocking transfers, burning balances, and re-issuing amounts. The holder controls the private keys but not the rules of the token. Bitcoin has no administrator, no blacklist function, and no "big red button" like destroyBlackFunds. There is simply no one to execute such a request.

The risk of blocking does not disappear entirely. It shifts from the protocol level to the level of exchanges, exchangers, and other centralized services—where users have their documents checked and accounts can be frozen. Attempts to impose censorship within the Bitcoin network itself have been made before, but the community strongly criticized such initiatives, and they were abandoned.

Privacy After Conversion

Converting USDT to Bitcoin removes the risk of freezing at the issuer level. But it does not eliminate on-chain surveillance: contrary to popular stereotype, the first cryptocurrency is not anonymous, but pseudonymous. Additional tools are required to hide the link between addresses. There are several ways to break the on-chain trail, each with its own limitations:

• CoinJoin — the joint mixing of coins from multiple users in a single transaction. This mechanism is usually recognized by analytical systems, so the mere use of CoinJoin can increase an address's risk score;
• Centralized mixers — accept funds into their own pool and then send other coins, breaking the direct on-chain link, but require trust in the operator;
• Bitcoin mixers using verified coins — do not mix user funds with each other and do not use their own liquidity pool. Instead, they utilize verified clean coins from trusted investors, allowing them to break the direct on-chain link between incoming and outgoing transactions.

Mixer.Money falls into the last category. Unlike CoinJoin, it does not mix funds from different participants. The bitcoin.mixer 2.0 algorithm uses verified clean bitcoins from trusted investors, which allows breaking the direct link between incoming and outgoing transactions. In "Full Anonymity" mode, coins are fragmented in a premixer into random parts and sent to independent investors, while the sender receives an equivalent amount at new addresses not linked to the original wallet.

Panopticon Tether: The Double Face of Control

The freeze function helps investigate crimes and return funds to scam victims. During its operation, T3 FCU has been involved in cases related to money laundering, drug trafficking, terrorist financing, and the activities of North Korean hacker groups. FATF has called the unit an "invaluable resource for law enforcement agencies worldwide." Such activities contribute to increasing regulatory trust in the crypto industry as a whole.

But this system also has a downside. USDT remains a centralized asset, and access to funds ultimately depends on the issuer's decisions and requests from authorities. In essence, the stablecoin has become a node in a global surveillance system: a private company, connected to hundreds of agencies and analytical services, capable of freezing "digital dollars" almost anywhere in the world. The USDT ecosystem resembles a digital panopticon: most users never directly encounter restrictions but know that such a possibility exists.

My expert conclusion: Diversifying among major stablecoins only dilutes dependence on a single company, but the architecture of freezing itself remains. Bitcoin is the only major digital asset that does not depend on decisions by an issuer, regulator, or bank. It cannot be frozen, seized, or burned by a third party's decision, and its issuance rules remain unchanged. However, Bitcoin does not hide financial activity from prying eyes, so maintaining confidentiality requires additional tools like Mixer.Money.