New Report Shows How Much Money Launderers Can Steal by Exploiting Freeze Delays

While blockchain investigators complain about slow responses from some centralized exchanges and stablecoin issuers when it comes to freezing illicit funds, a new report shows how this process works and how much it has already cost. By Samuele S.

Centralized exchanges and stablecoin issuers have been slow to respond to requests from blockchain investigators to freeze illicit funds, according to a new report by AMLBot.

The report, which was published on Monday, claims that a significant lag between the initiation of a freeze and its actual enforcement has already allowed the transfer of more than $78 million in the Tether (USDT) stablecoin on the Tron (TRX) and Ethereum (ETH) blockchains.

According to AMLBot, criminals are already familiar with the freezing process and are exploiting it to launder money. They may even be developing new money laundering tools that can be used to automate the process during the freeze delay window.

In one specific case that was presented in the report, it took 44 minutes to freeze USDT on Tron after a suspicious address was flagged. However, during this period, the wallet still had full access to 426,183 USDT, which means that a fast-acting operator could have moved the funds before the freeze took effect.

“This isn’s a theoretical weakness. It’s impacting the real world and bad actors are watching,” AMLBot warned.

According to the crypto AML compliance solutions provider, the delay is likely due to Tether’s custom multi-signature smart contract on Tron, which requires more than one digital signature to confirm a transaction.

This was likely done to improve internal governance and reduce the risk of unilateral actions, but it also makes a freeze request visible on-chain, allowing criminals to react accordingly.

A similar setup for USDT was also identified on Ethereum, with freezing delays of up to one hour, which allowed the withdrawal of at least $28.5 million in USDT on Ethereum.

“The average amount moved per wallet was over $365,000, which reaffirms that this isn’t a minor flaw—it’s a systemic issue across chains,” the report concluded, adding that, in the case of Tron, $49.6 million was withdrawn during freeze delay windows, with two-three transfers taking place on average.