Tether temporarily froze approximately 1.45 million USDt across four THORChain network vaults on Friday before unfreezing them hours later, according to Chad Barraford, technical co-founder of THORChain.
Barraford said Tether blacklisted the vault addresses without prior communication or explanation. He confirmed about two hours later that the funds were unfrozen and trading could resume.
Barraford expressed hope the freeze was an "error / misunderstanding" and said THORChain is seeking a conversation with Tether about the incident.
The incident underscores the operational risk inherent in deploying centralized stablecoins within decentralized protocols. Tether controls the ability to freeze and unfreeze USDt at its discretion, regardless of where the tokens are deployed.
This is not Tether's first such action. Earlier this week, cross-border payments platform Conduit Technology filed a lawsuit against Tether, alleging the company froze $2.76 million worth of USDt in a wallet connected to a Brazilian authority investigation from 2024.
In August, two Thai nationals sued Tether, claiming the company froze $42.4 million in USDt following an "informal request" from U.S. Homeland Security Investigations.
Both prior freezes involved amounts larger than the THORChain incident. Tether did not immediately respond to requests for comment.
