Tether temporarily blacklisted THORChain's USDT vaults on Friday, Oct. 9, freezing access to approximately 1.45 million USDT in network funds. Chad Barraford, technical co-founder of THORChain, reported the incident on X, confirming that Tether unfroze the addresses within hours.
Barraford said Tether had blacklisted four specific THORChain vault addresses. Trading resumed about two hours after the initial freeze, following Tether's decision to unfreeze all affected addresses.
Barraford said THORChain received no communication from Tether regarding the blacklist before the funds were unfrozen. He expressed hope the decision was made in error or due to a misunderstanding.
The incident follows a pattern of recent freezes. In October, cross-border payments platform Conduit Technology sued Tether, alleging the issuer froze $2.76 million worth of USDT in a wallet linked to a 2024 investigation by Brazilian authorities. In August, two Thai nationals sued Tether, claiming it froze $42.4 million in USDT following an informal request from U.S. Homeland Security Investigations.
The actions underscore the centralized control Tether maintains over USDT. The issuer can unilaterally freeze funds, directly impacting decentralized protocols like THORChain that rely on USDT for liquidity and cross-chain operations. THORChain, designed for censorship-resistant cross-chain swaps, faces operational disruptions when a critical asset is subject to centralized intervention. Such events introduce counterparty risk into otherwise decentralized liquidity pools and trading mechanisms.
Tether has not provided a public explanation for the blacklist or unfreeze.
