Tether USDt (USDT)

New York’s top prosecutors just exposed the GENIUS Act’s design flaw.

Stablecoin issuers can freeze your funds indefinitely. They earn 4-5% yield on frozen assets. They have no legal obligation to return them.

Tether has frozen $3.3 billion since 2023.

Circle is sitting on $114 million in frozen funds right now.

Both earn Treasury yields on money they’ve seized. The Act doesn’t require restitution.

The prosecutors’ exact words: “Funds stolen in or converted to USDT will never be frozen, seized, or returned.”

This is the business model: Freeze when politically convenient. Profit from the float. Return nothing.

84% of illicit crypto flows run through stablecoins. That’s $129 billion in 2025 alone.

The GENIUS Act was sold as consumer protection. It’s actually a legal shield that lets issuers profit from crime while victims get nothing.

Section 4(b) preempts state laws that could force restitution. Section 2(16) gives Treasury authority to seize, freeze, and burn.

The federal government can now order pe

I can personally see some bright sides for the way that CLARITY is going right now

1. stablecoins not being able to pass on yields means that people will be drawn to throw stablecoins into onchain products/pools, bringing more TVL onchain and users onchain

2. if stablecoin issuers can keep yield and not pass it on, which is what banks are lobbying for, unironically stablecoin issuers can become banks, and this will probably lead to a whole wave of fintechs and new companies just around trying to be banks with stables (already happening) and not only brings massive increase in issuance but also probably also further democratizes the field from CIRCLE and Tether

3. Crypto native stables have way more of an advantage/ reg moat against RWA regulatorily issued stablecoins, as they can pass on yields in interesting ways in the future

4. stablecoin issuers will probably be forced to hold treasuries and participate in the new "QE but not QE cause itll be done by banks not the fed style QE" and its overall bullish

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