Yes they can freeze your money by blacklisting it, you can even see in the contract code, but as far as I know they only freeze money linked to law breaking activity such as scamming and phishing, if you're just average people trying to make money from defi, you're gonna be fine, if you holding it maybe you're gonna be fine, but since it's private owned asset anyway, you still should be careful in case of depegging.

back then there were many scammers trying to scam people using blacklisted USDT to allure people into funding the wallet and then stealing their supposed "fee" so it's real.

after all, stablecoins' entire business is solely based on trust, if they just freezing people's money out of nowhere it'll cause uproar.