Stablecoin issuer Tether temporarily froze approximately 1.45 million USDT across four THORChain vault addresses on Friday, according to Chad Barraford, technical co-founder of the decentralized network. The funds were blacklisted and then unfrozen hours later without explanation.
Barraford disclosed the incident in an X post, stating that THORChain received no communication from Tether before the action. He reported that trading resumed about two hours after the addresses were unfrozen.
"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," Barraford said. "We hope that this was made in error or misunderstanding."
As a centralized issuer, Tether maintains the ability to blacklist specific addresses, effectively freezing USDT held within them. This mechanism allows the company to comply with regulatory or law enforcement requests, but it also means Tether can unilaterally impact liquidity within DeFi protocols.
The incident highlights the centralized control stablecoin issuers retain over their assets, introducing counterparty risk for DeFi protocols relying on them for liquidity and trading.
The freeze follows a lawsuit filed earlier this week against Tether by cross-border payments platform Conduit Technology. Conduit alleged Tether froze $2.76 million worth of USDT in a wallet linked to a 2024 investigation by Brazilian authorities.
In August, two Thai nationals initiated a lawsuit against Tether, claiming the company froze $42.4 million in USDT following an alleged informal request from US Homeland Security Investigations.
While the 1.45 million USDT frozen on THORChain is smaller than the amounts cited in recent lawsuits, the pattern demonstrates Tether's consistent ability to unilaterally freeze funds across various contexts. Tether did not issue a public statement or explanation regarding the THORChain incident.
