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, blacklisting is 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.
For me it look like stealing.
Those who tell Its right thing are not crypto and freedom friends.
Ofc, If there is Strong evidence that my account is invloved into something suspicous but If they will freeze just like that without much reason that's stealing.
And If it's stealing it means some humans are involved me and many others will take it personally If law doesn't help we help ourselfes but that hand will be punished whoever take our hard earned money.
People are just lose all the respect and dignity because of no punishments.