How stablecoin issuers freeze stolen crypto, and what it means for your USDT and USDC

Within hours of the October 2026 Binance hack, billions of dollars of the stolen crypto had been frozen, not by Binance, but by the companies that issue stablecoins. Tether and Circle can stop specific tokens from moving. That power limited the damage from the biggest crypto theft on record, and it’s worth understanding if you hold stablecoins yourself.

This guide explains how issuers freeze tokens, what their terms say, what can’t be frozen, and how it could affect ordinary holders. For the hack itself, see the $6.3 billion Binance hack.

What was frozen after the Binance hack

Blockchain analytics firm TRM Labs counted the freezes on chain. As of 00:30 UTC on 30 October 2026, it reported:

In total, about $2.67 billion. TRM said Tether froze 971.1 million USDT in the attacker’s main receiving wallet 37 minutes after the main theft, and Circle froze 823 million USDC in coordination with law enforcement. Separately, Arbitrum’s Security Council used its emergency powers to move about $30 million of ETH and ARB out of the attacker’s reach.

The attacker tried to race the freezes. According to TRM, it sold about 325 million USDT to market makers for ether, at a steep discount, and borrowed ether against USDT on the lending protocol Aave.

How freezing works

A stablecoin like USDT or USDC is a token issued by a company. The issuer controls the token’s smart contract, and that contract lets it block particular addresses. Once an address is blocked, the tokens in it can’t be moved. See stablecoins explained.

The issuers’ own terms spell out the power.

Circle (USDC)

Circle’s USDC Terms, last updated on 15 October 2026, say that Circle:

• reserves the right to block USDC addresses that it determines, in its sole discretion, may be associated with illegal activity or activity that violates its terms, and to freeze the associated USDC, temporarily or permanently, where it custodies those addresses;
• reserves the right to block the transfer of USDC to and from an address on chain, as its blocklisting policy permits;
• may be required to freeze USDC if it receives a legal order from a valid government authority.

Tether (USDT)

Tether’s terms, last updated on 26 February 2026, say Tether may:

• freeze any Tether tokens you hold, as required by law or where it decides, in its sole discretion, that it’s prudent;
• if it suspects prohibited use, report it to authorities, freeze or confiscate tokens and blacklist any address holding Tether tokens;
• seize property and deliver it to a government or law enforcement where circumstances warrant;
• suspend your access to its services, including purchases and redemptions, for example when a government directs it to or when it believes someone is trying to gain unauthorized access to your wallet.

What can’t be frozen

Freezing only works where an issuer has that control. Bitcoin and ether have no company behind them that can block an address. TRM said that, after the freezes, the attacker still controlled about $2.4 billion in assets beyond any issuer’s reach, including the stolen bitcoin, which it was splitting through a “peel chain” to make it harder to follow.

For those assets, the defense is different: exchanges and other services can refuse deposits linked to the theft. After the 2025 Bybit hack, the FBI asked exchanges, bridges, blockchain analytics firms and other services to block transactions with addresses used by the attackers. TRM said it expects the Binance attacker to use cross-chain bridges, swap services and over-the-counter brokers next. See crypto bridges explained.

Frozen isn’t the same as returned

A freeze stops a thief moving the tokens. It doesn’t automatically send them back to the victim. What happens next depends on the issuer’s processes and any legal orders, which can take time.

What it means for ordinary holders

The same power that stops thieves can affect anyone:

• You can be caught up in a freeze. Circle’s terms say that if you send USDC to, or receive USDC from, a blocked address, Circle may freeze it and take steps to terminate your USDC account.
• You could lose redemption rights. Circle’s terms say that in some cases you may forfeit rights associated with your USDC, including the ability to redeem it for dollars.
• You may not be told. Tether’s terms say that if it suspects prohibited use, it can report it to authorities without notice to you.

Practical steps

1. Don’t accept stablecoins from unknown sources, especially as part of “too good to be true” offers.
2. Check addresses before you send, and pay attention to your platform’s warnings.
3. Read the terms of any stablecoin you hold in size.
4. Remember the issuer risk: a stablecoin depends on the company behind it, and the collapse of TerraUSD showed that not every “stablecoin” stays stable.

Is freezing good or bad?

Both views exist. Freezing limited losses in the Binance hack and in earlier thefts. It also shows that stablecoins aren’t censorship-resistant in the way bitcoin is: a company can stop your tokens from moving. Which matters more to you depends on why you hold them.