Privacy Coins Hate This One Weird Trick: Buy $120M of Monero and Watch Liquidity Disappear 🫥

Tether has frozen $72 million in USDT linked to an address that routed roughly $120.2 million in stablecoins through a chain of swaps, including a large purchase of privacy coin Monero that pushed XMR from about $330 to an intraday high near $438, a 33% move. The address received the 120.2 million USDT on the Tron network on Thursday, according to onchain investigator ZachXBT, who detailed the flow in a Telegram broadcast on Friday.

Monero is a privacy coin designed to obscure sender and receiver data, and its daily trading volumes are thin enough that a single large order can move the market. After the spike, XMR was trading around $382 during the European morning, about 8% higher on the day, according to CoinGecko data.

ZachXBT traced the remainder of the funds across several destinations: more than $12 million was sent to deposit addresses at the KuCoin exchange, about $8 million flowed to instant swap services that convert one token into another often without identity checks, and roughly $8 million was bridged off Tron onto the Bitcoin and Ethereum networks using Near Intents, a cross-chain swap tool. The pattern of splitting funds across coins, exchanges and blockchains is a common method used to obscure the origin of illicit proceeds, and Tether's blacklisting of an address holding 72 million USDT indicates the issuer reached the same conclusion. Once frozen, those tokens cannot be moved or redeemed.

The original source of the $120.2 million has not been publicly identified, and no exchange or law enforcement authority has publicly attributed the activity to a named entity. Tether did not immediately respond to a request for comment, and KuCoin declined to comment. The episode underscores how thin liquidity in privacy-focused tokens can amplify the market impact of large transactions and how issuers of centralized stablecoins retain the ability to immobilize funds at the address level.