Tether temporarily blacklisted four THORChain USDt vault addresses on Friday, freezing approximately 1.45 million USDt before unfreezing them hours later. Chad Barraford, THORChain's technical co-founder, said Tether provided no explanation for the action.
Barraford announced the blacklisting on social media, reporting the addresses were frozen. He followed up about two hours later, confirming that trading would resume after Tether unfroze all affected addresses.
Before the unfreezing, Barraford said, "We don't know why this choice was made and have had no comms with USDT before this action and are actively reaching out to have a conversation." He added, "We hope that this was made in error or misunderstanding."
The incident underscores the centralized control stablecoin issuers maintain over assets deployed in decentralized protocols. Tether's ability to unilaterally freeze funds impacts the operational integrity of cross-chain liquidity networks like THORChain, which depend on stablecoin liquidity for swaps.
This follows a pattern of asset freezes by Tether. 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 linked to a 2024 investigation by Brazilian authorities. In August, two Thai nationals sued Tether, claiming the company froze $42.4 million in USDt after an informal request from U.S. Homeland Security Investigations.
For DeFi protocols, reliance on centralized stablecoins like USDt introduces counterparty risk to on-chain infrastructure. While these stablecoins provide necessary liquidity and stability, their centralized control creates a single point of failure for networks built on them.
