"Froze up" can mean "become solid," as when water turns into ice. But it can also mean "became immovable."
When a computer malfunctions, the picture on the screen stops moving: "my screen froze up."
When we experience stage fright, sometimes we "freeze up." "I thought I was prepared, but when I walked onto the stage I froze up. I felt paralyzed. I couldn't move."
In the case of financial markets, "froze up" is often used, because it is playing on the terms "liquid." "Liquid," "liquidity," and "liquidation" have financial meanings.
Water is liquid. When water freezes up, it becomes ice, which is solid and immovable.
In finance, something is liquid when it can quickly be sold for cash. To liquidate something is to turn it into cash, by selling it.
For example, stocks are usually liquid. If Google says that the price of Apple stock is $214/share and I own ten shares and I want money, I click a button on a brokerage website and, almost instantly, the stock is sold and I have about $2,140 available in my account.
In a financial crisis, a market may "freeze up." There is no liquidity. That means that the "market price" is meaningless, because the fact is that you simply cannot sell the asset at all. Nobody wants to buy it. Perhaps there are people who do want to buy it, but they can't because they don't have any money to buy it with. So you cannot sell the asset--it is stuck in your account, it is immovable, it is frozen.