Tether Freezes Over 100 Crypto Wallets After US Treasury Targets ISIS-K and Cartel Network

The U.S. Treasury has expanded its campaign against terrorist financing through cryptocurrency, sanctioning 134 digital addresses linked to ISIS-K and prompting Tether to freeze more than 100 accounts associated with the network.

On 2 July, the Treasury Department's Office of Foreign Assets Control (OFAC) updated its sanctions list to include 131 Tron addresses and three Monero addresses connected to the Islamic State Khorasan Province (ISIS-K). Blockchain analytics firm Chainalysis said the designated Tron addresses received more than $1.4 million in cryptocurrency since 2023 and transferred more than $880,000 before the sanctions took effect.

The latest designation highlights how U.S. authorities are extending sanctions beyond individuals and organisations to the digital infrastructure used to move illicit funds.

Treasury Targets Terror Financing

Chainalysis said ISIS-K, which operates across Afghanistan, Pakistan and parts of Central Asia, has relied on its al-Azaim Media Foundation to solicit cryptocurrency donations through websites and encrypted messaging platforms.

The firm identified historical donation addresses across Tron, Monero and Bitcoin, indicating the group has diversified its fundraising across several digital assets in an effort to keep money flowing despite mounting enforcement efforts.

Once addresses are sanctioned, exchanges, custodians and stablecoin issuers can quickly restrict access to associated funds.

Tether confirmed it froze balances held in all 131 sanctioned Tron addresses following OFAC's designation, demonstrating the central role stablecoin issuers now play in supporting international sanctions enforcement. The company has taken similar action before. In January, it froze more than $182 million worth of USDT across five Tron addresses under its sanctions compliance programme.

Multiple Networks Used to Move Funds

The Tron addresses accounted for the overwhelming majority of those identified by OFAC. ccording to Chainalysis, they collectively received more than $1.4 million from 2023 onwards before transferring over $880,000 through the network.

Tron's relatively low transaction costs have made it one of the world's most popular blockchains for stablecoin transfers, both for legitimate payments and, according to law enforcement agencies, certain forms of illicit finance.

The three Monero addresses present a different challenge. Unlike most public blockchains, Monero is designed to conceal transaction details, making the movement of funds considerably harder to trace.

Chainalysis said ISIS-K combined those cryptocurrencies with fundraising campaigns run through its media arm, allowing supporters to donate while funds moved across several digital networks.

The approach reflects a broader shift among terrorist groups and criminal organisations, which increasingly spread transactions across multiple cryptocurrencies to complicate financial investigations.

Sanctions Reach Beyond ISIS-K

The ISIS-K designation formed part of a broader sanctions package announced by OFAC.

Alongside the terrorism measures, the Treasury also sanctioned a Brazil-linked financial network associated with Primeiro Comando da Capital (PCC), which it described as Latin America's largest organised criminal organisation.

According to the department, the network laundered more than $30 million in illicit proceeds generated in the United States before transferring the funds to Brazil using cryptocurrency.

Together, the two cases demonstrate how digital assets have become part of investigations spanning terrorism, organised crime and cross-border money laundering.

Crypto Enforcement Continues To Evolve

The latest sanctions illustrate how regulators are adapting financial enforcement to the realities of digital assets.

Rather than focusing solely on individuals and organisations, authorities are also targeting the infrastructure that enables funds to move, while working with private-sector companies capable of freezing assets linked to sanctioned entities.

That model depends on cooperation between government agencies, blockchain intelligence firms and centralised cryptocurrency businesses such as Tether, whose ability to freeze stablecoin balances has become a key enforcement tool.

As terrorist organisations and organised crime groups continue adapting their fundraising methods, sanctions authorities are responding by treating cryptocurrency infrastructure much like the traditional financial system. The latest designations reinforce that digital assets are no longer viewed as existing outside regulatory reach but as another front in the effort to disrupt illicit finance.