A report by blockchain forensics firm AMLBot has revealed that Tether's USDT freeze mechanism contains a money laundering loophole due to delays in the freezing process caused by its multi-signature contract setup. Since 2017, this delay has allowed malicious actors to withdraw over $78 million worth of USDT on Ethereum and Tron networks before freeze requests are fully executed. The report describes this delay as a "critical window" exploited by illicit actors. Tether has responded by stating that the claim of a systemic loophole is misleading and emphasized that it is actively refining its processes. Critics argue that compliance challenges with anti-money laundering regulations, such as the Bank Secrecy Act (BSA), make it difficult for Tether to prevent misuse, including allegations that Iranian money laundering operations use Tether to evade sanctions.