USDT & USDC Freezing Accounts

[BTC Future 3946]

When we talk about Bitcoin's features we always promote the characteristics it has that make it an unconfiscatable currency where no third-party rules the network and no account can be frozen at the demand of a government. This is due to the nature of Bitcoin as a decentralized currency that provides complete control to the user and does not allow anyone to control the network. We talk in general about cryptocurrencies having the same features as Bitcoin and call this "Financial Freedom", as everyone in the world can transact with anyone else, without any restriction and a third party authorizing or blocking the transactions. 

 

Lately though, we've noticed quite a few occassions where this isn't real, or not exactly as we thought it was.

 

USDC is created by Circle and backed by Coinbase. It is a stable coin that right now holds more than $1 Billion in market cap. It is an ERC20 token that runs on the Ethereum Network, meaning it is a smart contract that has certain code to perform certain functions. One of these functions make a centralized entity (Circle) been able to block funds and accounts. 

USDC is run by Central Consortium, which is the overseeing body by both Circle and Coinbase. Central Consortium recently blacklisted an adress containing 100,000 USDC at the request of a law-enforcement agency. It was reported in the past (link) that USDC was able to freeze accounts and that it was a centralized entity but there wasn't a similar case published until now.

 

It is now reported that Tether is using similar control over the wallets containing USDT and is also able to freeze accounts. According to reports (link) there are already 39 cases of ethereum wallets that contain USDT being frozen by Tether. The total amount of these addresses contain $7,9 million in USDT. All these addresses are frozen and they cannot send/receive USDT probably at the request of government agencies and law enforcement. 

 

This is the message blacklisted addresses get on Etherescan when trying to move BUSD. So there seems to be a similar feature to freeze funds on the ERC20 Binance USD token as well.

 

Tether along with Bitfinex have the same CEO Paolo Ardoino and belong to parent company IFinex. Both companies are facing trial on New York about a loss of $850 million of the exchange clients funds. Tether is also supposedly backing each USDT with an amount of USD or "other assets" on a 1:1 basis. This of course has never been proven as Tether did not allow any audit to proceed and never disclosed bank USD and other asset reserves.

Tether right now exceeds 10 billion USD in market cap and according to cryptocurrency indexes as coinmarketcap and coingecko it has the most trading volume compared to any other cryptocurrency.

 

Edited July 10, 2020 by BTC Future

[Whited35 15269]

@BTC Future First of all thanks for bringing this important concern in this crypto community. I think basically there are two important aspects due to this decision of banning Ethereum addresses. First of all, their official statement is like this, 

"Through the freeze address feature, Tether has been able to help users and exchanges to save and recover tens of millions of dollars stolen from them by hackers"

Sounds good if they are really going to help exchange sites or victims who have lost their hard earned cryptocurrency holdings due to heartless hackers. Basically hacker's wallet addresses are being tracked from that day when  they have stolen a huge amounts I think Tether has frozen such addresses due to some sort of deep investigations. 

Now another part, let's see,  Tether addresses which are banned now,can no longer able to transact with Tether, any any existing  tokens held in such  addresses are also frozen. Here is the serious concern,k Tether alone can do these all things alone? If it can control, freeze and ban our wallet address with certain holdings, than where is the difference between this and any traditional financial system ? Where is the financial freedoms?  Anyway, I have really some terrible experience with Token lock or freezing feature of Ethereum blockchain I think some sort of upgrades or modification is needed there. Scammers have utilized this feature to cheat the users, have they found wormhole in the Ethereum network? I received 888888 KICK tokens and value shows $27.10 according to exchange rate on KuCoin. I got super excited because that KICK amounts was just a surprise and with that $27.10 I could comfortably have coffee with my gf at the nearest cafe  😉, I decided to withdraw that KICK amounts from my wallet to KuCoin exchange , I lost $5 worth of ETH as the gas fee but token did not move, till that time I thought there is problem in ethereum network but eventually , I knew it is locked I can do nothing with that tokens.If there was a clue about  locked or frozen tokens in the Ethereum network, it would be the best. 

Edited July 11, 2020 by Whited35
Have corrected the last sentence.

[BTC Future 3946]

4 hours ago, Whited35 said:

 they have to give some clue about locked or freezed tokens.

Each ERC20 token is a smart contract on its own. Ethereum has created its own programming language called Solidity, which allows endless possibilities for smart contract. We can't blame ETH developers for how their creation will be used by malicious entities. This is like blaming BMW because a car was used in a bank robery. Besides that they can't do anything about that and even if they could remove a certain command (freeze of tokens) the scammers will find another way.

A similar problem exists in Waves smart contracts. They solved it by creating a 5-star rating system. 

Edited July 11, 2020 by BTC Future

[Istiyak 14]

This is like blame a car which is use for robbery...waves have a similar problem but they slove it

[Whited35 15269]

29 minutes ago, BTC Future said:

Each ERC20 token is a smart contract on its own. Ethereum has created its own programming language called Solidity, which allows endless possibilities for smart contract. We can't blame ETH developers for how their creation will be used by malicious entities.

Upgrades of Ethereum blockchain are coming at least we can expect the better features in it in the future regrading its security, functionality and performance.Maybe misunderstanding, I was trying to cite such features in the upgraded version however scammers might still seek a way to cheat. Anyway, I have slightly modified the texts from the last sentence thinking like it gives quite bad sights to the hardworking developers.Thanks.

[BTC Future 3946]

6 minutes ago, Whited35 said:

Upgrades of Ethereum blockchain are coming at least we can expect the better features in it in the future regrading its security, functionality and performance.

Oh ok. I know what you mean though, but I don't think they will be able to have such mechanisms installed. The scammers will always find ways to exploit any systems. It comes mostly to doing research and figuring out what is going on. I had also tokens airdroped which I wasn't able to move as they were locked. It is becoming a trend in scam ICO's. By the way I'm out of reactions once again, I hope the forum considers the suggestion I made to make them all reset at midnight server-time.

[Samiya45 27]

Bitcoin investing can be made into money.Everyone who works on this platform can easily earn money with respect If Genesis knew better about this in various business wars, I would call it tomorrow.

[guatazoo 7149]

7 hours ago, Whited35 said:

@BTC Future First of all thanks for bringing this important concern in this crypto community. I think basically there are two important aspects due to this decision of banning Ethereum addresses. First of all, their official statement is like this, 

"Through the freeze address feature, Tether has been able to help users and exchanges to save and recover tens of millions of dollars stolen from them by hackers"

Sounds good if they are really going to help exchange sites or victims who have lost their hard earned cryptocurrency holdings due to heartless hackers. Basically hacker's wallet addresses are being tracked from that day when  they have stolen a huge amounts I think Tether has frozen such addresses due to some sort of deep investigations. 

Now another part, let's see,  Tether addresses which are banned now,can no longer able to transact with Tether, any any existing  tokens held in such  addresses are also frozen. Here is the serious concern,k Tether alone can do these all things alone? If it can control, freeze and ban our wallet address with certain holdings, than where is the difference between this and any traditional financial system ? Where is the financial freedoms?  Anyway, I have really some terrible experience with Token lock or freezing feature of Ethereum blockchain I think some sort of upgrades or modification is needed there. Scammers have utilized this feature to cheat the users, have they found wormhole in the Ethereum network? I received 888888 KICK tokens and value shows $27.10 according to exchange rate on KuCoin. I got super excited because that KICK amounts was just a surprise and with that $27.10 I could comfortably have coffee with my gf at the nearest cafe  😉, I decided to withdraw that KICK amounts from my wallet to KuCoin exchange , I lost $5 worth of ETH as the gas fee but token did not move, till that time I thought there is problem in ethereum network but eventually , I knew it is locked I can do nothing with that tokens.If there was a clue about  locked or frozen tokens in the Ethereum network, it would be the best. 

I really don't understand how this tether created, because they see spotting the USD price, thats means they no matter how demands it has the price cannot go opposite to USD price, so when they create tether, how much coin supply they are?

[Whited35 15269]

3 hours ago, BTC Future said:

I had also tokens airdroped which I wasn't able to move as they were locked. It is becoming a trend in scam ICO's. By the way I'm out of reactions once again, I hope the forum considers the suggestion I made to make them all reset at midnight server-time.

@BTC Future Never get worried about giving reaction 😉 I am concerned to hear your ideas in this thread. Well, as you have said, scammers have found so many ways to cheat users. After this sort of action from Tether, I have a question my head now, is my Tether holding is really safe ? What about the future of centralized tokens/coins in future ! 

[BTC Future 3946]

19 hours ago, yerimaahmed08 said:

That is why we should promote decentralized coin like DAI

DAI is created by MakerDAO when a new loan takes place on their platform. I'm not sure exactly how it works but being decentralized is certainly a positive. Perhaps DAI can become the future of stable coins. I haven't done more research on it though. Hopefully it won't be inflating too much in supply.

[TimopheyKa 3900]

Bro, of course! In fact, there is nothing wrong with using USDT, it is very safe, and it is also quite up-to-date. The fact is that you should choose the right exchanges, as well as the exchangers through which you will withdraw this coin, it is best to use bestchange. I wish you good luck!

[Captain Karim 0]

Well, I don't understand how accounts are frozen by Tether and then we say the network is decentralized? This is not possible and this is a major departure from the basic concept of Bitcoin and Crypto.

[tienda 8776]

Days ago I heard many news anti USDT! I think there is a campaign against USDT, actually there are a lot of stable coin is possible for this reason they are promoting false news about USDT especially to mess up the USDT image.

[Relium 424]

yeah, this coins/tokens damage crypto currency's decentral and non governing structre. This companies taking control of assets that we have and this is not good for anonymity and asset safety.

[Shaza Ahmad 1682]

Bitcoin is not like any other cryptocurrency, Bitcoin is completely decentralized and is not controlled by any party in the world and this is what makes it valuable, although we use blockchain technology until we want to limit its capabilities with such central methods of freezing funds.

[SuperCrypto 7192]

Tether has been adding titles to the blacklist since 2017 and so far the largest title on the blacklist has reached $ 4.5 million. Once these addresses are blacklisted, they cannot send or receive USDT.

[Cryptomint 433]

Some posts always give us a good information and also increase our knowledge. And this post is also from them. So thanks my dear friend.

 

[percare 3192]

I've heard about that. The Tether ceo said that they are centralized and they proceeded to freeze some Tether stolen from Kucoin too. Important to remember, there are centralized cryptocurrencies that act like paypal.

[Sykkuno 2887]

Dai is decentralized stable coin and doesn't block accounts. Tether and USDC seem to have in the contract the ability to a central super user to block funds and freeze them. I didn't know about this either until lately and it opens our mind to how not all cryptocurrencies are decentralized.

[kryptonick 2659]

I wonder if this is for all the blockchains USDT is using except Ethereum. I remember they were also planning to release a USDT in the BCH blockchain. Don't know how and I never seen bch having this capability. I think that the frozen accounts are from hackers but probably it doesn't matter as it makes a bad case for the use of USDT as for me.

[Maaz sultan 261]

On 7/11/2020 at 12:47 PM, Whited35 said:

Upgrades of Ethereum blockchain are coming at least we can expect the better features in it in the future regrading its security, functionality and performance.Maybe misunderstanding, I was trying to cite such features in the upgraded version however scammers might still seek a way to cheat. Anyway, I have slightly modified the texts from the last sentence thinking like it gives quite bad sights to the hardworking developers.Thanks.

Yes as now eth2.0 released so we think that past weakness of ethereum net work will solved in this huge eth upgrade and this all for securing the network and i hear that the transactions becomes much faster and they upgrade on the old eth and there is not any history remove they also includes proof of stack system but now i dont conforms this feature .

[bogdanoff 3173]

Good to know so I'm not going to keep any of these stable coins in a wallet, although I think this is done for some reasons that might mean there are illegal activities. No matter this it means these tokens are centralized so I'm not going to use them.

[Mella 3680]

On 7/10/2020 at 1:54 PM, BTC Future said:

Tether right now exceeds 10 billion USD in market cap and according to cryptocurrency indexes as coinmarketcap and coingecko it has the most trading volume compared to any other cryptocurrency.

Tether now is 20 billion dollars in capitulation. This was double from the summer in only a few months, meaning this stable coin will keep rising a lot and higher. I am thanks for the information you are provided my dear as this is an important thing to know about the freeze of the accounts.

[Fixfin 2569]

We have seen this and the response by Paolo Ardoino was that they are centralized stable coin at Tether, not decentralized, so it is something to remember when dealing with stable coins but perhaps with more tokens and coins that can have some lines of code that could affect our possessions.

[Abdul1168782 572]

On 7/11/2020 at 12:47 PM, Whited35 said:

Upgrades of Ethereum blockchain are coming at least we can expect the better features in it in the future regrading its security, functionality and performance.Maybe misunderstanding, I was trying to cite such features in the upgraded version however scammers might still seek a way to cheat. Anyway, I have slightly modified the texts from the last sentence thinking like it gives quite bad sights to the hardworking developers.Thanks.

Yes you are absolutely right. And in my opinion that blockchain technology will update this technology if they are  freezing account and why they are freezing account. It's really terrifying but it would be for scammers.