THORChain's technical co-founder Chad Barraford reported that Tether blacklisted four vault addresses Friday, temporarily freezing approximately $1.45 million in USDT held within the decentralized exchange's network. The funds were unfrozen hours later without prior communication or explanation from Tether.
Barraford disclosed the incident on social media, reporting the blacklisting action. About two hours later, he confirmed that trading had resumed after Tether unblocked all affected addresses. THORChain had no direct communication with Tether before the freeze and was seeking an explanation, with Barraford hoping the action was an error or misunderstanding.
The incident underscores the centralized control embedded in stablecoins. While THORChain operates as a cross-chain liquidity network, its reliance on wrapped assets like USDT means it remains subject to the issuer's discretion over token supply across chains.
Tether has faced similar allegations in recent months. In October, cross-border payments platform Conduit Technology filed suit alleging Tether froze $2.76 million in USDT in a wallet linked to a 2024 investigation by Brazilian authorities. In August, two Thai nationals sued Tether claiming the company froze $42.4 million in USDT following an alleged informal request from U.S. Homeland Security Investigations.
The ability to blacklist addresses functions as an on-chain enforcement mechanism, allowing the issuer to prevent specific wallets from transferring or accessing stablecoin holdings. For a decentralized protocol like THORChain, such actions can disrupt liquidity pools and routing capabilities. The network's vaults are critical for maintaining liquidity needed to execute cross-chain trades without relying on centralized intermediaries.
