Tether's Freeze Process Under Fire After Funds Slip Through

Tether, a stablecoin issuer, has faced criticism for its freeze process, which some argue leaves a window for funds to escape. According to Darcy, a blockchain asset-recovery investigator and co-founder of FlashRescue, targeted funds slipped out of a wallet while Tether was in the middle of freezing it.

This incident is not an isolated case, as Circle has faced repeated criticism in 2026 for freezing flagged or stolen funds too rarely. The lack of swift action raises concerns about security and custody within the stablecoin ecosystem.

The issue at hand is not just a matter of trust but also affects asset recovery processes and adoption across crypto, DeFi, and exchanges. As the use of stablecoins continues to grow, such incidents can undermine confidence in the entire system.