Tether Freezes $45M in Xinbi Wallets; Xinbi Shifts to USDD

On Sept. 9, blockchain analytics firm Bitrace reported that Tether froze more than $45 million in USDT across at least 22 operational wallets linked to Xinbi, a Chinese-language crypto marketplace. The action hit wallets used to receive deposits, route funds and process withdrawals and disrupted Xinbi’s payment rails. Xinbi told users to use USDD for transactions going forward.

Bitrace identified outgoing hot wallets run by Xinbi payment service Xpay and several third-party wallets with close financial ties to the marketplace. Newly activated replacement addresses were frozen again within 12 hours; one replacement moved about 1.8 million USDT before being blocked, leaving roughly 37,839 USDT stranded.

The freezes reached third-party operators associated with Xinbi. Bitrace noted an over-the-counter operator that processed more than $72 million over the prior year and another counterparty whose deposits through Xinbi totaled under $850,000.

Tether has increased its law-enforcement cooperation. The company reported in April that it works with more than 340 agencies across 65 countries. Tether’s T3 Financial Crime Unit, in collaboration with Tron and TRM Labs, had frozen over $450 million in assets by May. Independent trackers show several billion dollars of USDT holdings have been blacklisted.

Xinbi redirected deposits to USDD, a dollar-pegged stablecoin on Tron and Ethereum with about $1.5 billion in supply. USDD’s protocol documentation describes the token as overcollateralized and without a central issuer able to blacklist individual holders, and it states that token-level freezes are not feasible.

On-chain flows tied to Xinbi moved through Tron’s JustLend protocol and wrapped jUSDT, then through decentralized exchanges and cross-chain bridges before accumulating in USDD balances. Those paths reflect the marketplace using alternative settlement routes that reduce reliance on blacklisted USDT addresses.

Tether can blacklist or freeze USDT wallets under its control, but it cannot apply the same token-level restriction to USDD. To interrupt cashing out of USDD, investigators will need to target centralized services and counterparties that convert crypto to fiat, including exchanges, bridges and OTC desks, which typically require identity checks, banking relationships or custody arrangements.

The UK added Xinbi Guarantee to a sanctions list in March, describing it as a major Chinese-language marketplace and a money-laundering hub serving scam operations in Southeast Asia. The recent USDT freezes and Xinbi’s switch to USDD shift enforcement focus from freezing token balances to locating and disrupting the off-ramps that convert crypto into usable funds.