Interesting. Do you know the mechanics of how funds get locked? Are they prevented from being transferred on-chain or only from being removed at the USD-USDT edges?
Yes, Tether is nothing more than a weird bank. USDT is backed by real currency (or atleast Tether claims so). And is equivalent of the treasury giving you a bill and promising to pay you, just on a pollution causing blockchain
But see how nice having a blacklist is (which you seem to say is the core business of banks, when in fact it is to provide massive amount of capital as loans at a cost or create yield-producing aggregated products - which can work with any currency, crypto or not, and which Tether barely fits the definition of).
I d propose every chain to have a blacklist mechanism, temporary if you want, with a voting mechanism to remove innocents. You cant facebook your way ("we re just a platform") out of financial rules or you ll just end up rewarding thieves while benefitting innocents very little.
To be fair, they never claimed to be anything else, just a conduit to allow seamless transfers of usd value on the blockchain, while they hold the actual funds (applies to all non-algorithmic stables).
No, the real bills that back the money should still be sitting in the bank (although some people would question this, given that we are talking about tether. Only the token representation has been frozen.