THORChain Accuses Tether of Freezing $1.45M in USDT Vaults Then Unfreezing Them

THORChain technical co-founder Chad Barraford accused stablecoin issuer Tether of blacklisting the network's USDT vaults without explanation, freezing an estimated 1.45 million USDT across four wallet addresses before reversing course hours later. In a Friday post on X, Barraford said Tether had blacklisted the THORChain vault addresses, effectively halting trading on the cross-chain liquidity network. Approximately two hours after the initial freeze, Barraford reported that Tether had unfrozen all affected addresses and that trading had resumed.

"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 prior to the unfreezing. "We hope that this was made in error / misunderstanding." The lack of communication from Tether has raised concerns about centralized stablecoin issuers' power to unilaterally restrict access to funds, a recurring criticism of Tether's compliance practices. Cointelegraph reached out to both Tether and THORChain for comment but did not receive an immediate response.

The incident is the latest in a series of legal and operational disputes involving Tether's freezing of USDT holdings. Earlier this week, cross-border payments platform Conduit Technology filed a lawsuit against Tether, alleging the company froze $2.76 million in USDT tied to a 2024 Brazilian authorities investigation. In August, two Thai nationals also sued the stablecoin issuer, claiming Tether froze $42.4 million in USDT following an alleged informal request from U.S. Homeland Security Investigations.

Tether's ability to blacklist wallet addresses remains a defining feature of its centralized stablecoin model, granting the issuer significant authority over user funds in response to law enforcement and compliance demands. While THORChain's trading resumed following the unfreezing, the episode highlights the ongoing tension between decentralized finance protocols and the centralized control exercised by stablecoin issuers, a dynamic that continues to shape trust and risk assumptions across the crypto industry. The situation also comes amid heightened Senate scrutiny of Tether's ties to Cantor Fitzgerald, adding a regulatory dimension to the stablecoin issuer's growing list of legal challenges.