The issuer of the USDC stablecoin, Centre, has frozen an account with over $100,000 in USDC. The blacklisting came “in response to a request from law enforcement.”
The freezing of the address is likely due to illegal activity originating from the account. This freeze highlights the fact that USDC is not a decentralized cryptocurrency. That is, Centre can at least partially control it. As firms like Chainalysis continue to track transactions we will likely see an increase in blacklistings.
According to Circle’s website, blacklisted addresses can not send or receive crypto from a specific address. Blacklisting freezes the address, similar to freezing assets in a bank account. The current owner of the address 0xAa05F7C7eb9AF63D6cC03C36c4f4Ef6c37431EE0 is unable to retrieve their (allegedly) ill-gotten USDC. They will now have to prove their USDC was acquired through legit means.
In June, Centre announced it was creating a version of USDC which operates on the Algorand blockchain. At the same time, Centre confirmed it was creating versions to work on additional blockchains other than Ethereum. The more platforms USDC operates on, the more it will move towards mass adoption.
Centre is a joint partnership between Circle and Coinbase. Like Tether, USDC is pegged to the US dollar meaning 1 USDC = $1.00. The market cap of USDC recently broke $1 billion, according to Cointelegraph. It is currently the second most popular stablecoin behind Tether.
Which Brings Us to . . .
Tether has blacklisted 24 Ethereum addresses this year in cooperation with law enforcement agencies. The affected accounts collectively held millions of dollars in Tether. Interestingly, 40 accounts in total have been frozen from Tether, the first occurring in 2017.
General counsel for Bitfinex, Stuart Hoegner, spoke to the Block about this recent blacklisting. “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.”
The most recent address blocked in July has over $1.5 million in Tether. Looking at the transactions shows the bulk of the crypto was sent from Binance roughly a month ago.
These recent blacklistings display the long reach of centralized cryptos. While Tether/USDC are proven stores of value, the truly cautious might do well to use DAI as an alternative.