Tether Freezes $45M in USDT Tied to Xinbi Marketplace

Tether froze more than $45 million in USDT across at least 22 operational wallets linked to Xinbi Guarantee on September 9, according to blockchain analytics firm Bitrace. The action targeted deposit addresses, routing infrastructure, hot wallets operated by Xpay, and accounts belonging to third parties with close financial ties to the Chinese-language marketplace.

Xinbi Guarantee was sanctioned by the UK in March after being identified as a major crypto marketplace and money-laundering hub serving Southeast Asian scam compounds. The freeze aimed to disrupt Xinbi’s ability to move money rather than only immobilize assets. When Xinbi activated replacement addresses, those wallets were frozen again within 12 hours.

The enforcement action reflects Tether’s broader compliance infrastructure. In April, Tether said it works with more than 340 agencies across 65 countries. By May, the T3 Financial Crime Unit, which includes TRM Labs as a partner, had frozen more than $450 million in illicit assets. According to Stable.rip data, Tether has blacklisted $4 billion in USDT overall.

The USDD Switch

Facing the freeze, Xinbi shifted to USDD, a US dollar-denominated stablecoin described as overcollateralized and decentralized. USDD documentation states it is “tamper-proof and cannot be frozen.” Unlike USDT, USDD operates without a central issuer capable of blacklisting individual holders or addresses.

On-chain activity shows Xinbi-related funds moved through Tron’s JustLend protocol, jUSDT, decentralized exchanges, and cross-chain infrastructure before accumulating USDD. Approximately $1.5 billion in USDD is in circulation across Tron and Ethereum blockchains. Tether cannot impose address-level restrictions directly on USDD, shifting enforcement focus to disrupting infrastructure around the stablecoin rather than the asset itself.

Scale of Disruption

The freeze targeted specific operational addresses. One replacement business address moved 1.8 million USDT before the restriction was imposed. After restriction, 37,839 USDT became stranded in another account. During the preceding year, one third-party OTC operation had processed $72 million through Xinbi, while another third-party operator had received $850,000 in deposits through the marketplace.

The scale of Tether’s enforcement actions has grown. In 2024, Tether froze $29.6 million in a single address during an action against Huione Group. The current Xinbi freeze across 22 addresses represents a sustained enforcement strategy targeting both primary operators and the financial infrastructure supporting them.