THORChain technical co-founder Chad Barraford revealed that stablecoin issuer Tether took unilateral action to freeze four USDT vault addresses operating on the THORChain network on Friday. The freezing maneuver directly locked a total of approximately 1.45 million USDT held within the cross-chain protocol’s vaults, instantly halting the flow of user funds.
Access Restored After Two Hours
The asset freeze in the THORChain ecosystem was short-lived. Around two hours after the initial locking incident was detected, Tether decided to remove the blacklist status from the four affected vault addresses. Lifting the ban restored full operations to the vault reserves, allowing cross-chain trading activity on the network to return to normal following the restoration of access.
Executed Without Prior Communication
One highlighted takeaway from the incident was the complete absence of prior coordination between the crypto entities. THORChain stated that it received no prior communication or warning from Tether before the freeze was executed. The stablecoin issuer abruptly cut off access to millions of dollars in funds without providing detailed reasons to the protocol’s operators.
Scrutiny Over Tether’s Freezing Policy
The fund freeze on the THORChain network adds to the growing list of legal scrutiny surrounding Tether’s asset-freezing policies. The stablecoin issuer is currently facing a lawsuit from Conduit Technology challenging the withholding of 2.76 million USDT on its platform.
An even larger lawsuit testing the freeze policy comes from a Thai national suing over the freezing of 42.4 million USDT in assets. The multi-million-dollar freeze in that case was reportedly executed by Tether based solely on an informal request submitted by local law enforcement.
For the decentralized ecosystem, this string of fund-freezing incidents serves as a stark reminder of the limits of control over their infrastructure. Control from centralized entities demonstrates that capital flows on networks can be halted at any moment without prior notice.
Reported via Cointelegraph.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
