Frozen or not frozen, that is the question.

Written by: Eric, Foresight News

On September 2, Beijing time, according to BeInCrypto, two Thai businessmen have sued Tether, arguing that it froze their USDT worth 42.4 million dollars.

The lawsuit claims that on October 30, 2025, their wallet address was mysteriously blacklisted by Tether, triggered by an informal request from a U.S. government official. There was no subpoena, no court order, and no legal procedure. It took more than three months for the U.S. government to obtain a formal seizure order requiring Tether to destroy this batch of USDT and issue an equivalent amount of new coins to the government’s wallet.

The USDT contract contains privilege functions controlled by Tether that can only be called by the multi-signature wallet of Tether’s owners:

• addBlackList(address): Add an address to the blacklist (freeze). A blacklisted address cannot transfer USDT (the balance remains visible, but transfers will fail). It can usually still receive incoming USDT, but will also be stuck after the transfer.
• destroyBlackFunds(address): After the address has been blacklisted, it directly clears the USDT balance of that address to zero and permanently destroys it, while also reducing the total supply. This is an irreversible operation.

The reason for the freezing is that these USDT are related to funds involved in a pig-butchering scam case. The plaintiffs claim they bought USDT honestly and deny any relation to the case. Most importantly, Tether directly froze assets worth tens of millions of dollars solely based on "a statement from the U.S. Department of Homeland Security" without any formal documents from law enforcement.

Tether has often been compared to the "inaction" of Circle regarding asset freezing, but this incident has certainly slapped a group of people in the face.

During the Drift Protocol hack incident in April this year, hackers transferred approximately 232 million USDC from Solana to Ethereum via Circle's own CCTP. The entire process lasted for six hours, involving more than 100 transactions.

Throughout the process, Circle's "willful blindness" drew a barrage of criticism from the community. Circle's CEO Jeremy Allaire repeatedly explained that as a regulated issuer, they would only freeze USDC upon receiving formal legal/court/law enforcement directives, and would not unilaterally take action to avoid legal risks and "ethical dilemmas."

However, the spectators did not buy it. They believed that Circle's compliance stance and waiting for formal instructions amounted to "buttering up the U.S. government," saying if it were Tether, they would have frozen it long ago.

During that time, Tether's quick asset freezes were lauded as an industry benchmark—decisive, cooperative with law enforcement, and efficient.

Looking back now, that statement seems premature.

Circle's logic at the time was actually quite simple: freezing an address means depriving a person of control over their assets, and such actions must have legal basis, like a court order. Acting without documents could lead to mistakes; if a wrong address is frozen, who is responsible? This reasoning was interpreted as cowardice and flattery back then, but in the context of today’s news, it becomes the most responsible action for ordinary users.

It now appears that Tether seems to be the one "buttering up the U.S. government" even more. Not only did they blacklist the addresses, but the government later directly ordered them to destroy the original coins and issue new ones to themselves. A striking detail mentioned by the plaintiffs during this whole process is that freezing poses no cost to Tether, while the corresponding reserve assets continue to generate income. Money is frozen, yet interest continues to be earned—this arrangement seems profitable from every angle.

So many have failed to understand one thing. The power of freezing is never a virtue; it merely reflects the efficiency of power enforcement. The real issue is who wields this power, on what basis, and whether there are consequences for abusing it.

When Tether is freezing hackers and scam groups, everyone cheers, because the beneficiaries are themselves. But when the same mechanism falls on two businessmen, executed merely based on an informal request, you begin to realize that this mechanism's protection and harm depend not on the mechanism itself but on which side the person pressing the button happens to stand on today.

This is the deepest layer of contradiction within stablecoins. You hold USDT and believe possessing the private key gives you 100% control over ownership. In reality, all you possess is an entry on Tether’s ledger, and this company can unilaterally invalidate that entry at any moment. Inside a decentralized shell lies a center that is even less restrained than a bank.

Of course, I am not saying Tether is intentionally doing evil, nor am I saying Circle is a saint. Assisting law enforcement and combatting money laundering are not the issues; the problem lies in the boundaries. Today, an informal request suffices to freeze assets; will there be a day when no request is needed at all? Today it's the U.S. government; tomorrow it could be another government—will the same authority still apply?

The people who criticized Circle back then were actually condemning a power they imagined, thinking that the freezing power would always target wrongdoers. But the definition of power never included the term "wrongdoers"; it only concerns the freedom to target someone.

Whether Tether’s rapid freezing is a good thing is a question without a standard answer. But at least we can see now that the act of freezing is far more complex than imagined. When a button can make over 40 million dollars disappear without any legal documentation, the existence of that button itself is worth reflecting upon.