Freeze or not freeze, that is the question.

Written by: Eric, Foresight News

On September 2 Beijing time, according to BeInCrypto, two Thai businessmen sued Tether for freezing their USDT worth $42.4 million.

The complaint states that on October 30, 2025, their wallet addresses were inexplicably blacklisted by Tether, simply due to an informal request from U.S. government officials. No subpoena, no court order, no legal process whatsoever. It wasn't until more than three months later that the U.S. government obtained a formal seizure order, requiring Tether to destroy the USDT and issue an equivalent amount of new coins to the government's wallet.

The USDT contract has built-in privileged functions controlled by Tether, which can only be called by Tether's owner multi-signature wallet:

• addBlackList(address): Adds an address to the blacklist (freeze). A frozen address cannot transfer out USDT (balance is still visible, but transfers will fail). It can usually still receive USDT, but the incoming funds will also be stuck.
• destroyBlackFunds(address): After an address is blacklisted, directly zero out the USDT balance of the address and permanently destroy it, while reducing the total supply. This is an irreversible operation.

The reason for the freeze is that the USDT is related to funds involved in a pig butchering scam case. The plaintiffs claim they purchased the USDT through legitimate means and deny any connection to the case. Most importantly, Tether froze tens of millions of dollars worth of funds directly without any formal documents from law enforcement agencies, simply based on "a word from the U.S. Homeland Security Investigations."

Tether has always been compared to the "inaction" of Circle when it comes to freezing assets, but this incident has truly slapped a group of people in the face.

In the Drift Protocol hack that occurred in April this year, the hacker transferred approximately 232 million USDC from Solana to Ethereum via Circle's own CCTP. The entire process lasted for 6 hours, with more than 100 transactions in total.

During the entire process, Circle's "turning a blind eye" drew a lot of criticism from the community. Circle's CEO Jeremy Allaire explained multiple times: as a regulated issuer, they only freeze USDC when there is a formal legal/court/law enforcement order, and will not unilaterally freeze it to avoid legal risks and "moral dilemmas."

But the "chigua qunzhong" (onlookers) were not convinced; they thought Circle was being overly cautious for compliance, and waiting for formal orders was seen as "sucking up to the U.S. government," saying that if it were Tether, they would have frozen the funds long ago.

During that time, Tether's quick freezing was hailed as an industry benchmark—swift, cooperative with law enforcement, and efficient.

Looking back now, that statement was made too early.

Circle's logic at the time was actually very simple: freezing an address means depriving someone of control over their property, and such a thing must have legal basis, such as a court order. If you act without documents, who is responsible if you freeze the wrong address? This logic was interpreted as cowardice and flattery at the time, but in the context of today's news, it has instead become the most responsible approach for ordinary users.

Now it seems that Tether has become the one that "sucks up to the U.S. government" more. It's not just about blacklisting; the government later directly requested the destruction of the original coins and the issuance of new ones to itself. During the entire process, the plaintiffs mentioned a striking detail: freezing has no cost to Tether, and the corresponding reserve assets continue to generate income. The money is frozen, but the interest is still earned—this deal is a no-lose situation no matter how you look at it.

So many people have never understood one thing: speed is never an advantage when it comes to the right to freeze; it's just the efficiency of exercising power. The real questions are: who exercises this power, based on what, and is there any cost if it's exercised incorrectly?

When Tether freezes hackers and scammers, everyone claps and cheers because they are the beneficiaries. But when the same mechanism is applied to two businessmen, executed based on just an informal request, you realize that who this mechanism protects or harms never depends on the mechanism itself, but on which side the person pressing the button is on today.

This is the deepest contradiction of stablecoins. You hold USDT and think that having the private key gives you 100% control over ownership. In reality, what you hold is just an entry in Tether's ledger, and the company can unilaterally invalidate this entry at any time. Inside the decentralized shell, there is a center that is more unconstrained than a bank.

Of course, I'm not saying Tether is intentionally engaging in malicious acts, nor that Circle is a white lotus. Assisting law enforcement and combating money laundering are not problems in themselves. The problem lies in the boundaries. If today an informal request is enough to freeze funds, will tomorrow no request be needed? If today it's the U.S. government, will other governments have the same effect tomorrow?

Those who criticized Circle back then were actually criticizing the power they imagined—they thought the right to freeze would always target bad people. But the definition of power never includes the word "bad people"; it only has the freedom to target whom.

There is no standard answer to whether Tether's lightning-fast freezing is a good thing. But at least now we all see that freezing is far more complex than imagined. When a button can make more than $40 million disappear out of thin air without any legal documents, the existence of this button itself is worth everyone thinking more about.