Tether says it froze $1.5 billion after Binance hack; Bitquery says $729 million escaped
In brief
- Tether said it froze more than $1.5 billion in stolen USDT within 30 minutes of the hack.
- Bitquery estimated about $729 million in stolen USDT escaped, much of it swapped into ETH and TRON tokens.
- FBI's Oct. 31 alert attributed the theft of over $6 billion to North Korea's TraderTraitor.
- One attacker wallet borrowed about $45 million in ETH on Aave before it was frozen, Bitquery said.
- Tether named no receiving party, legal authority or timeline for the frozen funds.
What Tether says it did
In its Nov. 2 statement, Tether said the intervention kept the frozen funds from being transferred or laundered by attackers linked to North Korea. That link comes from an Oct. 31 FBI alert, which attributed the theft of more than $6 billion from Binance to North Korea's TraderTraitor hacking operation. US authorities have tied TraderTraitor to efforts to finance the country's weapons programs, and they've urged exchanges, blockchain operators and other service providers to block transactions linked to the theft.
Tether CEO Paolo Ardoino said the incident showed why USDT was an unattractive vehicle for criminals (in his telling, because the company could rapidly block suspicious addresses). Arca co-founder Rayne Steinberg contrasted Tether's response with traditional banks' histories of processing illicit transactions.
“Turns out a ledger you can actually see beats a duffel bag you can't.”
Tether also pointed to its track record. The company said it has frozen more than $7 billion in USDT across secondary-market addresses (including the Binance intervention) and has helped return approximately $1.2 billion to rightful owners and law enforcement through token reissuance. It reported working with more than 360 law enforcement agencies across 73 countries.
Where the freeze fell short
Bitquery's investigation identified 11 attacker-controlled wallets frozen by Tether across Ethereum and TRON. Six of them were already emptied when the freezes took effect. Bitquery estimated that approximately $1.76 billion in stolen USDT was ultimately frozen, about 71% of the amount taken, a figure that doesn't match Tether's own $1.5 billion count.
Then there's Aave.
According to Bitquery, one attacker-controlled wallet deposited $60 million in USDT into Aave shortly before it was frozen and borrowed approximately $45 million in ETH against it. Because the USDT had entered Aave's lending pool, freezing the wallet didn't immobilize the collateral.
Tether can restrict transfers from identified wallets, but assets already swapped into cryptocurrencies such as ETH are outside its direct control. Bitquery estimated the attackers still controlled approximately $3 billion in crypto as of Nov. 2, mainly Bitcoin and Ethereum.
Frozen isn't the same as returned
Across stablecoin issuers and other emergency interventions, roughly $2.7 billion of the stolen assets was immobilized or secured. Tether's disclosure didn't identify a receiving party, legal authorization or recovery timeline for the frozen Binance-linked USDT.
Frequently asked questions
Why didn't Tether's freeze capture all the stolen USDT from the Binance hack?
Tether can restrict transfers from identified wallets, but assets already swapped into other cryptocurrencies such as ETH are outside its direct control. Bitquery estimated about $729 million in stolen USDT escaped the freezes, much of it converted into Ethereum and TRON tokens via decentralized trading platforms.
How did an attacker get around the freeze using Aave?
According to Bitquery, one attacker-controlled wallet deposited $60 million in USDT into Aave shortly before being frozen and borrowed approximately $45 million in ETH against it. Because the USDT had entered Aave's lending pool, freezing the wallet did not immobilize the collateral.
Who gets the frozen Binance-linked USDT back?
Tether's disclosure did not identify a receiving party, legal authorization, or recovery timeline for the frozen Binance-linked USDT. The company has said it helped return approximately $1.2 billion to rightful owners and law enforcement in past cases through token reissuance.
