THORChain technical co-founder Chad Barraford accused stablecoin issuer Tether of blacklisting the network’s USDt (USDT) vaults without prior explanation. In a post on X, Barraford reported that Tether froze approximately 1.45 million USDT combined across four wallet addresses within the THORChain network. The action temporarily halted trading capabilities for these funds. Approximately two hours after the initial freeze, Barraford confirmed that Tether had unfrozen all affected addresses, allowing trading to resume. He noted that THORChain had no communication with Tether regarding the decision and was actively reaching out to understand the rationale, expressing hope that the action resulted from an error or misunderstanding.
Cointelegraph contacted both Tether and THORChain for further details but did not receive an immediate response. This incident follows recent legal challenges against Tether involving similar asset freezes. Earlier in the week, cross-border payments platform Conduit Technology filed a lawsuit alleging Tether froze $2.76 million worth of USDt in a wallet linked to a 2024 investigation by Brazilian authorities. Additionally, two Thai nationals sued the stablecoin company in August, claiming it froze $42.4 million in USDt following an alleged informal request from US Homeland Security Investigations.
The temporary freezing of THORChain vault addresses highlights the operational risks inherent in centralized stablecoin infrastructure when interacting with decentralized protocols. While the assets were restored quickly, the lack of prior communication underscores a potential friction point between traditional compliance mechanisms employed by issuers like Tether and the automated liquidity pools of DeFi networks. Such actions can disrupt market continuity and raise questions about the predictability of access to collateralized digital assets during regulatory investigations or security assessments.
This event occurs amidst increasing legal scrutiny of Tether’s asset-freezing practices, as evidenced by recent lawsuits from Conduit Technology and individual claimants citing requests from Brazilian and US authorities. The pattern suggests that stablecoin issuers are actively enforcing blacklist policies in response to external law enforcement inquiries, which may impact institutional confidence in the reliability of USDT as neutral settlement media. Market participants must consider how such interventions affect liquidity provision and counterparty risk when integrating centralized stablecoins into decentralized financial architectures.
