Can RLUSD Be Frozen? Ripple's Freeze and Clawback Settings Explained

A blockchain audit counted 11,045 wallets holding $5.8 billion in USDT that their owners cannot move. Nobody hacked them or guessed a seed phrase. The token’s issuer sent a transaction, and the balances stopped being spendable.

Many XRP holders believe the XRP Ledger is different. The video’s answer is that they’re half right. XRP itself can’t be frozen, but tokens issued on the ledger, including Ripple’s own stablecoin RLUSD, can be. The video checks Ripple’s published settings and the live ledger to show exactly where that line sits.

How many stablecoin wallets are frozen?

According to an on-chain audit by Bitquery, current to August 12, 2026:

• 11,045 distinct addresses were frozen across Ethereum and Tron.
• They held $5.8 billion of USDT, valued at the moment each was frozen.
• Every address designated by the US Office of Foreign Assets Control was frozen: 80 of 80 on Ethereum and 100 of 100 on Tron.
• Only about 11.8% were later released. The median wait for release on Ethereum was 386 days.

The audit says Tether can freeze any USDT balance and destroy the balance of an address it has already frozen, using a single key it holds.

The finding that bothers the video most: a released address is 12 to 19 times less likely than a still-frozen one to have ever been flagged for anything. People who had done nothing wrong were frozen first and sorted out much later.

The functions are public. Tether’s Ethereum contract includes isBlackListed, addBlackList and destroyBlackFunds, and anyone can read them.

Is this just a Tether problem?

No. Circle’s USDC has a much smaller footprint, roughly 370 frozen addresses holding about $109 million, but it has the same switch.

In August 2022, the US Treasury sanctioned Tornado Cash, and Circle froze about $75,000 of USDC in the listed addresses. In November 2024, the Fifth Circuit found the Treasury had overstepped its authority, and in March 2025 the sanctions were lifted. The video doesn’t fault Circle, which followed a government order. Its point is that the order was later found to be outside the government’s authority, and it still took about two and a half years to unwind.

What does the GENIUS Act require?

It requires every US payment stablecoin issuer to have the switch. The GENIUS Act, Public Law 119-27, defines a lawful order as a valid order from a court or authorized federal agency that requires an issuer to “seize, freeze, burn, or prevent the transfer” of its stablecoins.

Section 4 then says a permitted issuer may issue payment stablecoins only if it has the technological capability to comply, and will comply, with any lawful order. In the video’s words, an issuer without a switch isn’t a purer issuer; under US law it is a non-compliant one. The only remaining questions are who holds the key and what they have promised about using it.

Can XRP be frozen?

No, and the video says XRP holders have been right about this all along. The XRP Ledger documentation states it three ways:

• No one can freeze XRP in the XRP Ledger.
• Trust lines don’t hold XRP, and global freezes don’t apply to XRP.
• XRP is not a token and cannot be clawed back.

That protection is a property of XRP the asset, not of everything on the ledger.

What freeze controls exist for tokens on the XRP Ledger?

Anyone can issue a token on the ledger, and the ledger gives issuers these controls:

Setting	What it does
Individual freeze	Freezes one holder’s trust line; they can only send the token back to the issuer
Global freeze	Freezes all holders of the issuer’s token at once, except payments back to the issuer
No Freeze	Permanently gives up the ability to freeze; cannot be reversed
Clawback	Lets the issuer take tokens back from holders; off by default and can only be enabled before the issuer has any trust lines

The video notes clawback can be useful. For a tokenized real-world asset such as property, an issuer may need to return value to an investor who loses wallet access.

What did Ripple choose for RLUSD?

Ripple published its choices. A Ripple GitHub repository for RLUSD includes a settings table:

• No Freeze: marked not enabled.
• Allow trust line clawback: marked enabled.

The video then queried the RLUSD issuing account on a public XRP Ledger server and got a validated state at ledger 106847830:

• Allow trust line clawback: true
• No Freeze: false
• Global freeze: false, so nobody is locked out today.
• Require authorization: false, so anyone can hold RLUSD without asking permission.
• Deposit authorization: true on the issuing account.

Because clawback can only be enabled before any trust lines exist, this was decided on day one, before RLUSD had a single holder.

The video is careful about limits. RLUSD is not frozen. It could not find a case of Ripple freezing an ordinary holder’s RLUSD. And every compliant US stablecoin issuer must have this capability under the GENIUS Act. Its claim is narrower: the capability is on, and the permanent off switch was available but not used.

Ripple’s CTO Emeritus David Schwartz said much the same in an April 21, 2026 post on X. Asked whether RLUSD could be a neutral bridge like XRP, he said it could be used as a bridge but is not neutral, because it is tied to Ripple, which can freeze and claw it back, and to the United States, whose courts can order Ripple to act.

A four-question check for your own holdings

The video ends with four questions you can answer today:

1. What share of your crypto is in tokens issued by a company rather than native assets? Count every stablecoin (USDT, USDC, RLUSD) and every tokenized asset.
2. For each, has the issuer set No Freeze? For XRP Ledger tokens, one query on the issuing address answers this. Usually the answer is no.
3. If every issuer-controlled token you hold became unspendable on the same morning, what could you still move?
4. Can anyone else answer question one about you faster than you can?

What to watch next

The video’s broader point is that the ledger is neutral. It will carry an asset nobody can touch and an asset with a key attached, side by side. As more of the industry’s activity moves into stablecoins and tokenized assets, the share of a portfolio that sits in the second category can grow without holders noticing. Track how much of your own position has moved there, and check issuer settings before you open a trust line.