Tether Freeze Process Criticized for Allowing Funds to Escape
Tether's freeze process has come under scrutiny after a blockchain asset-recovery investigator revealed that flagged funds can escape while the freeze is being carried out. Darcy, co-founder of FlashRescue, stated that in one recent case, the funds at an address were allowed to be moved even as Tether was freezing them.
This criticism suggests that there is a significant time gap between proposal and finalization on the blockchain during the execution of Tether's freezes. An analysis of 2,955 Tether freeze events found that the average time between a freeze proposal and its execution is 2 hours, 16 minutes, and 15 seconds.
The freeze mechanism is controlled by a multisignature wallet, which contributes to the delay. The analysis revealed that at least 60 addresses completely emptied their holdings before the freeze could take effect, moving a total of $20.4 million in USDT. These transfers started on average just 14 minutes after the freeze proposal was submitted.