Tether temporarily blacklisted four THORChain USDt vault addresses Friday, freezing approximately 1.45 million USDt in network funds. Chad Barraford, technical co-founder of THORChain, reported the incident on social media, stating the funds were unfrozen hours later without explanation.
Barraford said Tether provided no communication prior to the action. He expressed hope that the freezing was an "error or misunderstanding." Trading on the network resumed about two hours after the addresses were unfrozen.
The event highlights the centralized control stablecoin issuers maintain over their assets on-chain, enabling unilateral freezing actions regardless of the protocols holding them.
The THORChain incident follows other recent allegations against Tether regarding asset freezes. This week, cross-border payments platform Conduit Technology filed a lawsuit against Tether, claiming the company froze $2.76 million worth of USDt linked to a 2024 investigation by Brazilian authorities.
In August, two Thai nationals sued Tether, alleging the stablecoin issuer froze $42.4 million in USDt based on an "informal request" from U.S. Homeland Security Investigations. These prior cases underscore a pattern of Tether blocking funds in response to legal or investigative requests.
For decentralized protocols like THORChain, which aim to provide censorship-resistant cross-chain liquidity, the ability of a centralized entity to unilaterally freeze assets introduces counterparty risk not typically associated with native on-chain liquidity pools.
