David Schwartz, the former chief technology officer of Ripple, has defended Tether's decision to freeze $42 million in assets tied to a "pig-butchering" scheme. The freeze, which was carried out without a warrant, is part of a lawsuit filed in the Southern District of New York. Schwartz also warned that the case highlights massive anti-money laundering risks.
The Freeze and the Lawsuit
Tether, the company behind the USDT stablecoin, froze the funds as part of a legal action in the Southern District of New York. The move was tied to a "pig-butchering" scheme, a type of fraud where scammers build trust with victims over time before convincing them to hand over money. The freeze was warrantless, meaning it happened without a court order. That detail has drawn attention from legal and crypto circles.
Schwartz's Defense
Schwartz, who served as Ripple's CTO before leaving, defended the freeze. He also warned of massive anti-money laundering risks. His defense is notable given his background in crypto and his history of speaking out on regulatory issues. Schwartz's comments suggest he sees the freeze as a necessary step, even without a warrant, to stop the scheme from causing more harm.
The AML Warning
Schwartz's warning about anti-money laundering risks is a reminder of the challenges that crypto companies face. Pig-butchering schemes are notoriously difficult to track, and the warrantless freeze raises questions about how far companies can go to stop them. Schwartz's comments point to the need for better compliance and monitoring, though he didn't offer specific solutions.
The lawsuit is still pending in the Southern District of New York. The freeze remains in place, and the case continues to unfold.
