THORChain Co-Founder Accuses Tether of Freezing $1.45M USDT Without Notice

Chad Barraford, technical co-founder of cross-chain liquidity network THORChain, publicly accused stablecoin issuer Tether of temporarily blacklisting the protocol's USDt (USDT) vault addresses on October 9, freezing an estimated 1.45 million USDT across four wallets without prior communication. In a post on X, Barraford stated that Tether offered no explanation for the action, adding: "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. We hope that this was made in error / misunderstanding." Roughly two hours later, Barraford confirmed that Tether had unfrozen all affected addresses and that trading had resumed.

The incident is the latest in a series of legal and regulatory challenges facing Tether over its use of the blacklist function on USDT. Earlier in the same week, cross-border payments platform Conduit Technology filed a lawsuit alleging that Tether froze $2.76 million worth of USDt in a wallet tied to a 2024 investigation by Brazilian authorities. In August, two Thai nationals also sued the stablecoin issuer, claiming Tether froze $42.4 million in USDt following what they described as an "informal request" from US Homeland Security Investigations. These cases have raised broader questions about centralized control over stablecoin liquidity and the transparency of issuer-led freezing actions.

Tether's ability to blacklist addresses remains one of the most powerful tools available to stablecoin issuers, enabling compliance with law enforcement requests but also drawing criticism from DeFi advocates who argue that such unilateral actions undermine the censorship-resistant ethos of decentralized finance. Cointelegraph reached out to both Tether and THORChain for comment on the temporary freeze but did not receive an immediate response. The episode adds to mounting scrutiny of Tether's relationships and governance, with Cantor Fitzgerald separately facing questions from a US Senate Democrat over its ties to the stablecoin company.