Tuesday's trade came a day after the Sounders declined their 2014 contract option on goalkeeper Michael Gspurning.
The 27-year Frei was Toronto's career leader in appearances and had spent more time on the club than any other player. He missed most of the past two seasons with injuries, including a broken lower leg in 2012. He has played in just one MLS game the past two seasons.
Frei has a 1.54 goals-against average in 82 MLS regular-season starts. He was Toronto's first-round pick of the 2009 MLS SuperDraft, and he played in college at California.
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