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USDT and USDC Blacklists: How the Blocking System Works

USDT and USDC are used as digital dollars. You transfer them, receive them, and store them wherever you like. However, there is a feature that many people discover at the most inconvenient moment. These stablecoins have an issuer, and that issuer can freeze tokens at a specific address. It looks like this: the balance in the wallet remains, but you cannot transfer the coins. The reason is not the exchange, the wallet, or the network. The restriction is enabled via smart contract functions.

Next, we will look at how such blocks are structured, who is most often subject to freezing, and how to check for risks in advance.

In this article:

  1. What is the USDT and USDC blacklist
    1.1 What happens after a block
  2. How the blocking system works at the smart contract level
    2.1 Is it possible to transfer funds via another contract
    2.2 The difference between USDT ERC-20 and TRC-20 blocks
    2.3 Why blocks have become widespread
  3. What USDT and USDC are actually blocked for: typical practical scenarios
  4. How to check an address in advance and avoid being blocked: Blacklist Check from Antiswap
    4.1 In what situations is a check mandatory

What is the USDT and USDC blacklist

The USDT and USDC blacklist is a list of addresses for which transfers are prohibited. If an address ends up there, the balance in the wallet does not disappear, the private key works, and the wallet opens, but you can no longer send tokens. Any attempt to transfer will run into the contract rules, and the transfer will not go through. Sometimes the transaction even reaches the network, but the contract cancels the execution.

It is important to understand that the decision to block is not made by the network or validators. The restrictions are imposed by the company itself that issued the stablecoin. For USDT, it is Tether; for USDC, it is Circle. Their smart contracts have built-in administrative functions, and every addition or removal of a block is recorded on the blockchain.

Networks like Ethereum or TRON operate in a decentralized manner and continue to process transactions as usual. But USDT and USDC themselves are not a separate network; they are tokens with rules set by their issuer. If an address is added to the blacklist, the contract simply stops allowing operations with these coins, even if the network itself is working without issues.

What happens after a block by Tether

After an address is added to the blacklist:

  • the balance remains in place and does not disappear
  • incoming transfers are possible, but new USDT also immediately become blocked
  • sending, exchanging, and any operations with USDT are unavailable
  • the address itself continues to work normally with TRX and other tokens

How the blocking system works at the smart contract level

Before executing a transfer, the smart contract checks the sender's and recipient's addresses. If at least one of them is on the blacklist, the operation is not executed.

In practice, it looks like this:

  • the transaction is sent to the network
  • the fee is deducted
  • the contract returns an execution error
  • the transfer does not occur

There is no manual verification or waiting here. It is an automatic rule that works 24/7.

Is it possible to transfer funds via another contract

Sometimes people try to withdraw funds via:

  • intermediary smart contracts
  • DeFi protocols
  • cross-chain bridges

This does not work. Any such service ultimately calls the transfer function in the USDT or USDC contract itself. And there, the blacklist check is triggered again. It is impossible to bypass the restriction via third-party services or DeFi.

The difference between USDT ERC-20 and TRC-20 blocks

The blocking mechanism itself is the same in both networks. Restrictions are applied at the USDT smart contract level and do not depend on whether Ethereum or Tron is used.

The difference manifests in practical usage:

  • USDT ERC-20 is more often involved in the operation of exchanges, DeFi, and other infrastructure services
  • USDT TRC-20 is actively used for P2P transfers, exchanges, and everyday payments

Blocks occur not only in Ethereum and Tron but also in other networks, such as BNB Chain, Solana, and several others. Freezing cases are rarer there because the turnover of USDT in these networks is significantly lower.

This does not mean that one network is safer than another, as the blacklist is provided for in every USDT contract and can be applied in any network where this token is issued.

Why blocks have become widespread

The main reason for mass blocks is not the internal policy of the companies, but the requirements of regulators and law enforcement agencies. Stablecoins are issued by American companies, so they are required to comply with US sanctions legislation.

The scale of blocks has long ceased to be isolated. According to on-chain analytics for 2023–2025, about 7.2 thousand addresses were blocked by Tether in the Ethereum and Tron networks, and the total volume of frozen funds exceeded $3.2 billion.

An address can be added to the blacklist in two main cases:

  1. Connection with participants on OFAC sanctions lists
    Not only the sanctioned wallets themselves are blocked, but also addresses that interacted with them, even indirectly.
  2. Request from law enforcement agencies
    An address can be frozen as part of investigations into fraud, hacks, or money laundering; sometimes such blocks are temporary.
    • fraudulent schemes
    • hacks and thefts
    • scam projects or illegal services
  • from counterparties who participated in fraudulent schemes
  • via exchanges in chats, Telegram, or forums
  • as part of P2P deals without understanding the source of funds
  • at the request of law enforcement agencies
  • as part of fraud investigations
  • due to a connection with sanctions lists
  • long chains of transfers between new addresses
  • splitting of amounts
  • services associated with high AML risk
  1. You paste the wallet address.
  2. You select the network.
  3. You get the result.
  • transferring USDT/USDC from a new partner;
  • working via P2P or private deals;
  • receiving funds from third parties;
  • storing large amounts on a single address.
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