About $2.4 billion out of this is already frozen by Circle and Tether. Some of the big ones:
- 971.15M USDT (Ethereum): https://etherscan.io/tx/0x7baba482077843514d9c72bac0110ba091...
- 823M USDC (Ethereum): https://etherscan.io/tx/0xc954c86f118e8e410e6a3eb9e3b38ff4a9...
- 312.73M USDT (Tron): https://tronscan.org/#/transaction/71b0ec0fe873fe820c37cc3ec...
- 175M USDT (Ethereum): https://etherscan.io/tx/0x0c07a5e428ce233a3bcb40f257ad899594...
Probably not everyone knows, but USDT has a "black list", and admins can prevent any address holding USDT from spending. The black list is implemented in USDT contract.
So USDT is not truly decentralized and your money can be frozen for any reason or no reason at all.
So USDT is a great amazing decentralized censorship-free drop in replacement to USD except:
- much more awkward to use
- more liable to hacks
- deposits are not insured
- fewer legal protections
- doesn’t pay interest (or not easily anyway)
- and as I find out, bannable by a central institution with lower legal oversight than the Fed
I’ll keep a mental note of this.
I have said this many times, and will probably have to say it many more: Stablecoins are nothing but a face-saving measure for the US government.
It is politically impossible to go back on KYC/AML measures in the traditional financial system, even if some of them were perhaps a bit too ill-advised. It's much easier to say "this is shiny new tech, very different from that old tech over there; we support innovation so we won't impose KYC requirements on it", even if there's no logical reason to do that.
As it stands, stablecoins let you make a keypair in the privacy of your own home (or your own agent sandbox, as it were) and immediately start transacting. They're allowed-by-default instead of blocked-by-default, with the US government still able to block you if they have a specific reason. No traditional bank I know of, in any country, works like this. This is a valuable capability to have, technologically, even if there's no technical reason why a Postgres database and a REST API couldn't provide the same service, but faster and more easily.
> It is politically impossible to go back on KYC/AML measures in the traditional financial system
It’s politically irrelevant more than impossible. Most Americans simple aren’t visibly encumbered by KYC/AML enough to make it a priority.
> They're allowed-by-default instead of blocked-by-default
So were banks in the wildcat era.
if its bannable by a centralized place please explain how it is decentral? i thought that was the kind of controls a decentral system was specifically designed against. is that understanding of mine flawed?
That technically true for any coin where miners are organized enough, see the ethereum fork where bad contract made wrong people lose money so they forked entire chain to get the money back
Suddenly, physical Gold in a safe at home looks fairly decentralized and censorship-proof
Until you need to move or share it. That's why monero XMR is the only serious fungible and decentralized cryptocurrency
I don't doubt what you're saying. But as someone who is really not buying into cryptocurrencies, this is exactly what someone who holds a big amount of some obscure cryptocurrency would say.
I've heard good things about monero from a friend. This is not an attack on monero, rather a reflection on the general tone of the message.
>some obscure cryptocurrency
Monero is so obscure the IRS has put out a million dollar bounty to trace it, unlike any other crypto even btc lol
It's a store of value, rather than a medium for transaction. If you want to move or share it, you pick it up and move or share it mostly...
I think how easy it is depends on the country and state of things. I would not want to move or share even small amount of gold outside of first world countries even in good times.
Unless you are moving more than about 1 million dollars in gold, it's actually quite easy to move it.
It's very easy to pick it up, put it in a car or van, and move it to a different location.
It's much less easy to convert it to something you can actually spend. Even if you can get it to a buyer, they'll always offer you less than you expect/want.
Reputable dealers have KYC reporting duties of their own. Disreputable dealers... may have other ideas.
Of course dealers have KYC (you generally need to give your id) but this thread was about having one's own gold in a safe, not about shady dealings or stealing gold.
Gold sells at about 1% less than the current market price of the gold content of your item which I find fair. It might be easier here in Antwerp than in other places to deal with gold because it's kind of a gold trading hub. You can basically show unannounced (I suggest going by bike rather than by car because there is little street parking) and trade your gold for cash at the -1% rate, obviously if you get to the million euros range it's going to be a bit different, but for a few tens of thousands it's business as usual. And it's not like it's a difficult place to reach from anywhere else in the EU.
I would be nervous moving borders with ~1 million dollars worth of gold.
Talk to airport security people. The number of travelers, particularly from India and the middle east, with gold bars is nuts. It isn't loose bricks in a sock bag, but piles of one-ounce bars in plastic wrappers, stacked like playing cards, is not unusual. The Canada mint has a reputation for excellent gold/silver. Middle eastern tourists regularly return home carrying stacks of canadian gold/silver bars.
As opposed to junk like this: https://www.reddit.com/r/Gold/comments/1xab90c/first_gold_ba...
When the canada mint does a movie tie-in, they do it better: https://cdncoin.com/collections/rcm-new-arrivals/products/20...
Look into the history of USDT. It's creation was dodgy to say the least.
Over time I believe it's founders did start backing it with Treasuries so now it must turn a nice profit for them.
You missed out that it is run by crooks closely associated with SBF and shady banks like Deltec
https://dailycoin.com/sbf-tether-deltec-secretly-colluding/
Also, it's not decentralised, they just unilaterally froze 2 billion in funds.
> bannable by a central institution with lower legal oversight than the Fed
It’s way easier to take a company to court than any government entity.
> great amazing decentralized censorship-free drop in replacement
It's not and never supposed to be and everybody who uses it in any significant amount knows that. Don't mistake a cryptotoken with a cryptocurrency.
I love monero but then you have the problem that very few exchanges support it and if you need to convert big amounts of it in common currency it gets quite hard to do compared to eth/btc
Well, nobody said that the true anarchy would be easy. No government actually wants to approve the original spirit of crypto, everything they allow is either a toy or a scam they can take advantage of.
Then people get into shitty casino tokens that are widely available because the state doesn't care about a little gambling and got surprised that they are in the casino in the first place.
This is absolutely what true anarchy looks like. Before you can blink, someone else has taken over, and now you have a new boss, only worse.
Not the case at all. True anarchy is community governance where a very local group of people start working together. Anarchist meetings are not restricted to, but include, looking like a bunch of people in a room, voicing their problems with this week's chief speaker as moderator, and then everyone in the room splitting off into working groups to address each problem. The chief speakers rotate around the group each week to avoid moderator bias, and each working group might reach out to other anarchist groups to exchange information and resources freely.
This is but one model developed within academia for an entirely anarchist organisation, there are dozens of others and they have been both studied for efficacy (they tend to work better than a more hierarchical structure), as well as put into practice in real life within certain organisations. To this date there are a number of non-profit organisations and coöperatives that use this governance system to improve the situation where they are locally and achieve their goals — whether that's "everyone working to improve the local community" or "make good products for a client".
The entire point of anarchism is that there isn't One Big Guy, it's that it's people, deciding on a system and working together on a small scale — this then translates to the big scale through cross-group meetings, information sharing, and resource sharing. There is a lot of evidence within the social sciences to back these methodologies up as being very efficacious compared to traditional methods of group organisation, as well as being more democratic than traditional alternatives.
This additionally tends to be how some kinds of open mic nights work, as well as some kinds of modern speakeasys.
> True anarchy is community governance
It’s a bit antithetical to anarchy to start defining true and untrue configurations. It’s more accurate to say that while anarchy permits chaos, it also permits self-organization, one mode of which is hierarchy-free community governance. Most of us have experienced this among friends when e.g. deciding where to go to dinner.
This is one of these circular relationships. You and your friends can experience true, free, cooperation exactly because you don't have to be on guard 24/7 against enemies, because you live in a civil society that has rules, and people to enforce those rules - ultimately by coercion through violence.
Peaceful anarchy evaporates when bad actors arrive. I wish it wasn't so. A structured civil society is the nearest we've managed to get to being able to live in relative freedom almost all of the time. It's the least violent, least coerced option we've been able to find.
The other way would be to go live in a group by yourselves off the grid, and as long as every one of you is good and decent that will be fine, but the moment one of you goes bad, you either have to choose violence or they will do whatever they want to you.
The term anarchy is used in academia for all kinds of non-hierarchical civil societies. Academia being academia, they chose to stick with a dumb label. But the set I think OP is describing is more intuitively understood as non-hierarchical social systems.
No one ever said USDT was decentralized.
USDT is created by a super shady company and is not at all decentralized or censorship-free. You could have made the argument for Bitcoin (and still can to a certain level) but most cryptos that propped up after that or stablecoins do not follow the hacker philosophy and more the banker one. Ironic that the whole crypto movement got co-opted by the likes of JPM which it seeked to replace.
Recently I tried to donate to a project using their preferred crypto payment processor flow, which purported to support "Coinbase Wallet" integration. So thinking that was just like, Coinbase, I said "sure why not" thinking it'd save me the effort of copy/pasting long strings back and forth.
Turns out, Coinbase "Wallet" is a completely separate thing from Coinbase, and long story short, ultimately ended up accidentally converting some spare ETH I transfered into some kind of garbage Binance "wrapped" Litecoin. Which had zero indication/warnings in the app other than a like 4 pixel Binance logo superimposed on the 16 pixel Litecoin logo that it wasn't the real thing.
Once I gave up on this Wallet experiment I ended up needing Gemini to walk me through all the Binance "gas" nonsense to finally manage to swap into a real coin I could transfer out (like 80% of what I started with after subtracting gas fees and miscellaneous leftover change I was stuck with). And while transferring I had to avoid like a dozen alternative networks consisting of seemingly random strings and a scary red banner saying "yo don't fuck this up".
My first red flag should have been that Coinbase Wallet's Play Store name literally advertised betting on prediction apps. Second red flag was while looking for "Litecoin" in the list of coins, there were literally about 5000 different spam/meme coins with dozens of near identical clones that were all name squatting on top of each other.
As someone who came of age in the Crypto 1.0 "Bitcoin is for buying drugs" era the entire exercise was utterly baffling and somehow significantly less usable than crypto was a decade ago for actual payments. I guess for a young person looking to illegally gamble their paychecks at some unlicensed offshore prediction market it provides some utility I'm missing but man, the experience just made the post-Web 3.0 crypto scene look .... grim.
Normally they publish the wallet id, then you send money there using any method you want. What Gemini would do in your place?
Tether isn’t decentralized or censorship free in any way
[flagged]
Tether's entire business model, providing an almost-unregulated USD cryptocurrency, relies on them not arbitrarily banning people. They don't do it frequently or without thought. You're far less likely to get banned from USDT than just about any non-cryptocurrency financial institution.
> Tether's entire business model, providing an almost-unregulated USD cryptocurrency, relies on them not arbitrarily banning people
No, their entire business model relies on bank/CC providers don't ban them. Somehow, they treat all crypto related transactions as iffy but USDT, bought to buy crypto, got under much less scrutiny. The entire problem their solver was that new users couldn't move cash to exchanges fast enough to join bull runs.
You can say the same for many other industries:
> almost-unregulated except when the authority say no.
Yeah, until Trump (or whoever is president at the time) tells them to.
What will they do when the alternative is broken bones?
Turns out that there are quite good reasons to have a centralised currency after all. Who would’ve known.
Isn't the centralization the reason they got stolen? It was Binance that was hacked, not the blockchain technology.
By the way, it wasn't just Binance that got hacked. Several other exchanges were hit too.
A supply chain attack? Do all these exchanges routinely import new cryptocurrencies?
Well in traditional banking you essentially have the ability to reverse
True, but it gets complicated or even impossible if you try to do across international/fragmented transfers & countries.
yeah the issue is if you built it they will co opt it
All systems can be bent, broken, or subverted.
not bitcoin-core in the past 14 years of being a public network
Btc has a similar blacklist with tainted coins because it's not fungible unlike actual decentralized cryptocurrency like monero xmr
lol no. you can mix them over and over and it becomes a p^n complexity
The topic is bitcoin being hacked and stolen. I do not think this outcome was the intended outcome for users?
Perhaps I am missing your argument.
no. binance was hacked, again, again. the wallet was not. else they would have stolen only from the btc wallet.
not your keys not your bitcoin
Not practical for ordinary people. No regular person is holding their own wallet, and even the technically sophisticated who do get their keys stolen or lose them to faulty backups or technical snafus.
Calling/implying that it's technically sophisticated is not really reasonable. Having a BTC (or other currency) wallet is utterly trivial, let alone from a technical standpoint, it's much easier than setting up an e.g. Coinbase account. The only issue, outside of choice of course, is people being ignorant of what needs to be done and I think that can largely be explained by the fact that centralized providers spend billions on marketing while decentralized wallets spend nothing on it.
The intention of bitcoin was to have a digital medium with similar properties as cash: no need to trust anyone else, and you can exchange it with whoever you want. Cash can also be stolen if someone takes your wallet, leaving you no recourse except the law
Imho Bitcoins being stolen is not at all Bitcoin being "bent, broken, or subverted", it's just a natural consequence of the design goals. If an unrelated third party could block my bitcoins by accusing me of terrorism that would be subverting the system, and such things have not happened to bitcoin-core (but have happened in other parts of the bitcoin ecosystem)
> Cash can also be stolen if someone takes your wallet, leaving you no recourse except the law
The issue that is often raised with Bitcoins and other cryptocurrencies is that not even the law can help you in case of theft. Now, it's true that the police wouldn't bother helping me recover a wallet with 100€ into it, but things change if someone steals millions or even billions like in this case.
You steal billions, you just pay the police 100000000 to look away.
Ok, so you are saying this is business as usual, and the theft is exactly what one should expect, as with any other store of value.
I find something odd about this, because it seems to contradict some of what I understand of the arguments for bitcoin.
However, there is merit to your point, and if something is working as intended, then nothing was attacked in the first place.
The argument for bitcoin being secure is more along the lines of "if you store your own bitcoins securely nobody can take them from you". Storing them securely is easy in principle (just keep them on an airgapped computer, or write the key down on paper, then "just" do physical security well) but hard in practice (major security-convenience tradeoffs). However, storing your bitcoins with a major provider like binance has a terrible track record and not something the hardcore bitcoin advocates actually recommend
Huh? You can trace bitcoins forever, and people would probably pay extra for some vanity bitcoins; and probably pay less or nothing for some bitcoins that are legally questionable.
Your answer does not answer anything. The discussion is about whether or not to have the trusted third-party. Pro-ttp said that ttp protects from criminals. Anti-ttp said that ttp can make your own money dissappear because ttp is bending the rules. You said nonsence, your examples are not showing any rules or contracts about digital property which are being bent. Why any bitcoin criticism from anyone is always so weak?
All bitcoins are legally questionable; but no: ones that can be traced to contract killings not just stealing do not trade at a discount.
Turns out the reason crypto was invented isn't "decentralization" at all, it was nerds feeling left out and wanting their own financial instrument grift.
You mean the smart nerds
For the less economical-savvy ones it was like Beanie Babies or Tulips (with predictable consequences)
I still buy tulips, just not at boom market prices.
The predictable outcome is that the deers get to them, but I got to see a few go into full bloom last year and it was wonderful.
Yes, but there are more good reasons to have it be decentralized.
Well sure, but the average consumer needs and/or wants some protections, safeguards and insurances. If my bank gets hacked or even if I get skimmed it's considered their fault and I'll get my money back.
>I'll get my money back.
If the police retrieves your money from the thief?
That's if it was stolen from you directly.
If it's stolen from a bank, it's their obligation to recuperate you.
FWIW, most countries have a type of insurance if a legally operating bank goes under, at least some of your savings are protected (eg. in Serbia that's up to 50kEUR).
While I can't speak for other places, in the UK, if you haven't been careless and report quickly enough, your refund is not dependent on anyone being caught.
Arguably any fiat-collateralised stablecoin is ipso facto centralised and trusted (someone needs to 1) issue the coins only against fiat collateral and then 2) hold onto that collateral reliably and 3) return it upon presentation of the coin), and at step 3 they can always say "no, we won't give it to you".
Your point has nothing to do with fiat.
It applies equally well to a fiduciary coin with a promise that 1 gcoin = 1g of gold or whatever.
Indeed.
However, it does not necessarily apply to algorithmic stable coins (Terra) or crypto-backed overcollateralised coins (DAI). That's why I said "fiat-backed".
Why couldn't a privacy focus coined, like Monero, be a stablecoin?
You don't need to see where the coins are and move to promise $1 of going for every coin.
Probably the founders/employees of the company issuing/redeeming the token would be arrested very quickly. Tornado Cash people got arrested for much less.
How are you guaranteeing that your private stablecoin will keep its $1 value?
How are you bootstrapping a network to validate private transactions without the promise of potential gains in coin value as its popularity takes off?
Who makes that promise? That's who you are ultimately trusting.
Decentralized is a great concept but it’s 99.9% rug pulls and you can’t get any safety unless you centralize. As an investor there is no way to protect yourself because the rug pulls are several orders of magnitude more sophisticated than most people’s understanding.
> As an investor there is no way to protect yourself
Why? BTC is pretty stable longterm and nobody is going to touch your cold wallet. Anything that has an owner or legal entity is not decentralized, subject to either rug pull or censorship and shouldn't be touched, sounds very easy.
Everything that promises you any return is a scam in crypto, simple as that.
The U.S. government is the largest beneficiary of this service. More than $2.1 billion in USDT connected to or requested by U.S. authorities out of over $4.4 billion in total illicit USDT freezes globally.
It's tethered to the USD. It seems expected that the government in charge of USD is doing the most blacklisting.
If they baked in a function to freeze USDT, why not also add a function revert a transaction flagged as part of a hack?
Because they own and control their own smart contracts but do not own the network that the contracts are deployed to.
Plus, freezing funds and waiting for US law enforcement to weigh in rather than being the proverbial judge, jury and executioner is now likely to keep you on the right side of said law enforcement.
> Because they own and control their own smart contracts but do not own the network that the contracts are deployed to.
I assume they call a method on the contract to freeze the coins (with some superuser kind of signature), so they could easily write a method that moves the coins back, too. This should be similar in terms of gas costs.
The law enforcement theory seems more likely, yeah.
Did they ever show proof that they actually hold $1 for every tether? This was big a few years ago but never heard anything about it since. (I could Google it but others here probably want to know)
I lost ~20,000 USDT by accident once and the CTO just sent me some freshly printed ones. That was many years ago though.
Anyone can refuse any bitcoin, too. But that's not implemented in the contract, just by how much real money people want to give you for bitcoin.
A shame that they can and do so here but happily facilitate transfers or scam victims, human trafficking and sexual abuse including of minors.
So when tether is blacklisted, is it reissued?
The financial system has evolved over 5000+ years and is like an endless series of Chesterton's Fences at this point. Here we find another: the ability for a regulator or a bank to freeze assets is once again proven to be a feature not a bug.
Managing a wallet where there is no recourse if your wallet is compromised is simply too difficult when even crypto exchanges get hacked and otherwise sophisticated people get compromised when taking cautious measures (eg [1]).
Crypto really is and always was a race to the rug pull.
[1]: https://www.straitstimes.com/singapore/about-3-5-million-los...
You know what isn't a Chesterton's fence? Payment processors being able to dictate what I can or can't spend my money on.
This by itself is a reason to push for more crypto acceptance, in my eyes.
I must live a very vanilla, sheltered life because I’ve never bought anything and wondered if a payment processor would object to it.
The payment processors don't object to you. They usually object to the store or the platform you're getting things from.
It's invisible, insidious censorship. They don't hit your hands with a ruler and say "stop, no buying that, bad". They make it so that what they don't like doesn't get to be on the store shelves in the first place. Hard to buy what isn't being sold, isn't it?
As for why they do it - it's unclear, but there's speculation that payment processor leadership might be in part ideologically captured by the usual "think of the children" moralizers and puritans. The same types that used to spurn moral panics, rally against D&D and later GTA, and are the first in line to propose sacrificing freedoms for imaginary safety - now allowed to wield covert influence over most of the payments that happen online.
If you mean Visa's porn jihad, that's most likely a saudi dude threatening to pull a large investment, it obviously has nothing to do with children, but any haram.
The usual given reason is that porn/adult stuff tends to generate a relatively large number of chargebacks, due to factors like (1) predatory/dark patterns by porn providers (2) guys’ partners seeing porn charges on the credit card statement and freaking out, and guys claiming they were “hacked” or whatever and then following through and disputing the charges.
Even if the absolute number of chargebacks is small, in relative terms it’s still several times larger than it is for non-“adult” charges, and that kinda destroys profit margins — more support calls, more work, etc.
Or so they say.
I’m not in the industry, so I don’t know. I can certainly believe that many of the oligarchs in charge are weird shitheads with bizarro conservative views, but payment processor leadership doesn’t seem to give a fuck about morals in any other manner, so it’s also kind of weird to me that they’d pick porn and porn only (a seemingly passé target for most conservatives these days) as the one and only target of a uh, decades-long distributed lowkey conspiracy that spans multiple generations of payment processor leadership. ¯\_(ツ)_/¯
Absolutely agree 100%. Even if they’re not trying to be puritans, this is absolutely the outcome.Yeah but what if I hacked that money fair and square? Why should anyone have the right to block my hard earned not-cash?
Frozen assets are still a wallet with no recourse.
What's the point of even stealing the stablecoins? They're controlled by private companies that can easily freeze them
Am I missing something here? Seems like a waste of time
> waste of time
It seems like it took some number of minutes and scored billions, and at that point it was a matter of whether/how much they could trade out before it was locked. I don’t know how many minutes or hours it took to lock? If they managed to trade 1% before blocking, that would be an extra tens of millions. If 10% that would be hundreds of millions, etc.
Fair enough
Apparently [1], he managed to put them as collateral on a lending platform. That allowed him to borrow ETH. The way it works is that if you don't pay back the loaned ETH, the lenders can take the collateral. Except that here the collateral is itself frozen. So apparently, the ETH as now safe in the hacker's wallet and the lenders just lost a bunch of money.
I wonder why not swap them? And had he, would it have bricked the swap pool?
[1] https://x.com/czesmaill/status/2115988477905080716
Maybe swap pools and/or law enforcement working together with stablecoin issuers are more vigilant about pools than they are about various DeFi lending pools, given that one usually represents a change of ownership while the other does not?
Thanks for sharing, very smart move from the badboys.
That's smart
In this case it looks like the attacker managed to swap some stablecoins into ETH before they were frozen.
I'm not clear whether the stablecoin providers will then be "creating" new coin to make binance whole - without which you've still fucked binance
That's a quick recipe to lose all their customers
That's exactly the scenario they say they would never do and go as far as to have external audits to prove that they're not just "printing" free cash
They just freely edit their credit.
I guess the point is simply that "blacklisted" coin is no longer a liability. They wouldn't be "printing free cash" they'd be cash neutral.
The alternative is the stablecoin providers effectively keep the money for themselves. At that point the justification for the blacklisting seems like little more than self enrichment?
Why would they? In addition to moral hazard (next time), this is binance's fuck-up.
Have bad security, get hacked.
If binance wanted to hedge against that risk, they could have bought a cyberinsurance policy (if they could get one for the amounts they'd need).
They can just pocket the corresponding 5.6b USD.
It reveals what they are to the public. It's fake crypto with all the downsides of crypto but none of the upsides.
So they got “only” ~$3 billion
Poor fellas, barely enough for rent
It's one banana, what could it cost? $10?
If USDT gets to a frozen list - that means that Tether does not need to comply with requests to convert it into USD? I guess this is very useful for Tether and the other stable coin emitters.
That doesn't sound very decentralised.
Stable coins are not decentralized
Stablecoins only use the accoutrement of blockchain as smoke and mirrors to distract and confuse regulators, not because they actually benefit from it at a technical level. They aren't really decentralized at all and could just as easily be a database, except for the regulatory thing
nothing about crypto is decentralized. it's verified by enormous mining farms, who contribute hashes to centralized pools, all stored on one central ledger, and interfaces with the fiat/legit financial system only by using that very financial system.
oh, and three acounts hold like 25% of all btc in circulation.
crypto can do some things, but decentralization isn't one of them. just ask Coinbase
USD tether is barely crypto at all, it's a wrapper around treasury bonds which the US govt. regulates
which is why - sadly - there's not really any point to crypto anymore (other than as a speculative instrument driven mostly by fomo)
The stated point is to prevent central banks from printing currency / inflation. The claim is that crypto today worth 1% of the world's BTC will be worth just under 1% of the world's BTC in 2300, at least barring e.g. progress in quantum cryptography, a sunspot taking out digital infrastructure, or similar.
That's probably socially harmful, but it is the claim.
Inflation is increasing prices, which has causes other than central banks putting more money into circulation. When Bitcoin’s value drops, prices in Bitcoin increase so it experiences inflation regularly.
The former is inflation of the money supply, which causes price inflation when it exceeds economic growth.
The latter is volatility.
Apples and oranges.
Interesting I didn’t know you can block/cancel transactions. Does this have to happen before the new block is minted. or it can happen after, that’s what I’m inclined to think just based off of the word block
Centralized stablecoins like USDT and USDC aren't layer-one cryptocurrencies like Bitcoin or Ethereum. They're more like applications running on top of other blockchains, usually as smart contracts, and their issuers hold admin keys which can freeze, mint, burn, and otherwise redistribute funds at will. As far as timing goes, stablecoin issuers can't actually cancel or reverse a transaction that's already in a block that's been mined, but they can freeze the receiving address afterward and burn the funds there, then reissue them elsewhere, which has much the same effect.
At which point they might as well use a database to keep track of the money, like banks do, and drop the cryptocurrency aspect, which was only ever a fig-leaf to keep regulators away.
That sounds interesting. How is that different from a bank? What are the advantages and disadvantages compared with a traditional bank?
If traditional banking is available to you, then I don't think that there are any significant advantages. But lots of people—notably those in countries with unstable currencies [0]—don't have access to high-quality banking, so for them, stablecoins can be an acceptable substitute in some cases. It's probably not a great idea to hold stablecoins long-term (there's always a risk of the sponsoring company going under, and unlike bonds they don't pay interest), but it should be fairly safe to use them for transfers, since the transfers are quick enough that there are very low odds of the company becoming insolvent while the transfer is underway.
[0]: https://news.ycombinator.com/item?id=50012907
It's much easier to ban or regulate cryptocurrencies than it is paper cash and brick-and-mortar banks.
Its a weird loophole or so.
You take 1 $ from someone and give them a token, now you have money the other not. In theory you need to make sure you keep the 1$ but you want to pay people and you are greedy so you invest it and suddenly everyone is broke.
That's not a loophole: that's literally the way fractional deposit traditional banking works.
The only difference is regulations -- banks have them; things labelled crypto don't (in the US).
Thats not the same. The banking system doesn't just has regulations, it also has the state behind it.
And its a second layer: fractional deposit ONTO fractional deposit.
It’s completely unregulated and they can print infinite money.
Wait, it is decentralized but can be frozen ?
No. You just can't use these platforms. But a knowledgeable hacker will be able to add a transaction tot he blockchain.
Less than half is frozen then?
> About $2.4 billion out of this is already frozen by Circle and Tether. Some of the big ones:
How does freezing crypto work in this context?
The smart contract for those tokens supports freezing. Tether just calls the freeze function on that address.
Can they forcibly reverse the transaction so that Binance gets their money back?
No. The last time this happened, it led to the Ethereum/Ethereum classic split, and that was 10 years ago.
However, the stablecoins are not “real” cryptocurrencies like e.g. BTC or ETH, but are built as smartcontracts on top of ETH, basically using it as a big replicated database. So they might(?) just manually “give back” the money to Binance, as in freezing money in the stolen account forever and “printing” an equal amount to Binance's credit.
Or, to put it in another way, no need to reverse an erroneous SQL transaction if you can just create a new one that fixes the data you altered.
And it's impossible to mix them because Ethereum is even anonymous than Bitcoin.
How so? If anything, Ethereum can host trustless mixers more easily than Bitcoin due to its smart contract execution being Turing complete.
Isn't it already too late at that point? The tokens would have moved already.
I think the idea is that they freeze them indefinitely, and then they no longer count against the centralised reserves, since they can never cash out. Now they can mint the equivalent amount back to Binance and remain solvent.
And how do they ‘mint’ 2 billion without affecting the price of tether and without finding 2 billion to back it?
If they can mint with no impact doesn’t that mean they can just print money?
It’s been years since anything Tether minted was plausibly 100% backed by real assets. Both times they’ve been forced to show the books, they only had fractional backing. And they’ve minted tens of billions of tokens since.
And yet people like the parent and those with billions invested in Tether seem to believe that it's all backed and fully solvent and minting new money from thin air is completely reasonable.
It's remarkable to me how long this scam has lasted and how much confidence people have in it, in spite of the very shady characters involved and the likelihood of fraud.
Personally I'm skeptical of Tether. But you don't need to trust them to believe that if they permanently freeze Z USDT and then mint Z USDT then their ratio of reserves to USDT is unchanged.
Because if they permanently freeze 2 billion in a wallet, that Tether can never move or cash out, so their liabilities go down 2 billion. They can mint an equivalent amount to a non-frozen wallet without affecting their reserve ratio.
And yes they can print money, you have to trust their reserves that are off chain.
To be clear: There is no permanently frozen guarantee. Tether can and has unfrozen (called removeBlackList)addresses before. All of this is just a public database fully controlled by Tether Limited.
Moved where? Moving to a different wallet wouldn't prevent freezing. It's 5B, impossible to cash out or exchange for different crypto quickly.
Excluding wash and artificial activity, supposedly stablecoins trade 400M/h so if it took 2h to notice and lock they might have been able trade about half a billion without overwhelming existing volumes?
https://finance.yahoo.com/markets/crypto/articles/stablecoin... (I didn't verify per-stablecoin volume, or actual volume at those hours, or typical volume for those exact hours, which a better analysis would have done.)
here's an interesting article by DataFinnovation arguing that blacklisting crypto is doomed to fail.
https://medium.com/chainargos/losing-the-blacklisting-race-e...
right but too late to call freeze on the original wallet address as per gp's post. I would imagine it got distributed to many wallets and attempts to tumble by the time Tether could move on it.
they took loan against it.
Most crypto assets are operated by a smart contract that controls every transfer. So the contract can decide to not perform certain transfers.
Not your keys, not your crypto.
Keys? Hahaha, still not your crypto.
Unless it's Monero, the only currency to be declared illegal in most countries because it's too much like cash.
Monero is legal in most countries.
Like cash except you can use it at crazy scale, so worse than cash when crime is considered.
That's why it's paramount for LEOs to go after people doing the bad deeds instead of simply banning a whole monetary ecosystem, just because it's easier to do.
If you ban a coin, instead of persuing the actual criminal, then you're both doing a disservice to honest users of the coin and leaving the bad actor to do harm to society in some other way.
There are only 8B people in the world - they all fit into a "box" of 2k by 2k by 2k of humans.
It really isn't that hard to know who's doing bad things to others, especially with current technology.
No, it's exactly why that works.
Criminals used to meet in person to discuss crime (because mail/phones can be intercepted) and meet in person to move cash. It was a hard limiting factor on what they can get away with. With e2e messengers and anonymous crypto both of those "issues" are fixed.
Do you know anyone who uses it for legit purposes? I don't. I bet you ban a coin like that and you kill orders of magnitude more crime revenue compared to .001% of honest users using it to send money home and save a few dollars on the transaction.
It really is hard, because time isn’t addressed in the idea.
It is an evolutionary process, with incentives are high enough for both sides to keep finding solutions.
It doesn't, the hacker already loaned against it to get eth so they froze saves assets.
Frozen? What are they going to do, fork the blockchain?
If people dont know, they should look up DAO hack and Ethereum hard fork.
USDT and USDC are both centralised crypto currencies with a single source of truth.
In other words, they are essentially casino chips, not cryptocurrencies.
Freezing crypto is so disgusting to me I don’t know…
Like the whole point of crypto to me I money without central governance.
I never liked stable coins or the concept of it and it’s mainly a huge fraud, so freezing just adds on top.
That's not the whole point at all. And there are truly wild west cryptos, but most people want some trustworthy regulatory body, whether it's a government or not, backstopping their funds when they get large enough.
For instance to unwind a 5 billion dollar robbery
"people want some trustworthy regulatory body"
Have you talked to Crypto-enthusiasts before? They very much don't want that.
I’m pretty sure cryptocurrency enthusiasts are a small minority of cryptocurrency users.
But if I am the victim of a $5k or $50k robbery, I'm out of luck. Yay.
That’s why crypto is so dumb
But without crypto we couldn't helped people in Gaza during the genocide. It has it benefits just not for the privileged white guy.
I’m pretty sure crypto benefits privileged white guys quite a bit. I can think of one in particular…
Stablecoins are fiat on-chain and they are legal so they need to have the freezing mechanism in the smart contract otherwise they could go to jail.
So crypto + legal company means not really following bitcoin ideology anymore
At least a motivated person could audit the smart contracts on this. It isn't like it's a surprise when it turns out it's possible to freeze these coins.
this isn't crypto, it's US dollars with a techno-wizard sheen on the top for no reason
governments, banks freeze currency all the time
> Freezing crypto is so disgusting to me I don’t know…
The feature literally appears to have just saved over two billion USD from being stolen! I mean, fine, "disgusting" is subjective. But the need for the feature is real and quantifiable (and very large) and it did what it advertised.
it cuts both ways - it's fine when 2B of heist money gets frozen, but much less "fine" when your paycheck gets frozen because you've attended a political rally the ruling party/class does not like.
It's so sad that it's inconvenient for you to commit fraud and tax evasion and pyramid schemes and rug pulls.
My heart goes out to you, along with these two definitely not Nazi salutes.
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I thought crypto was built specifically to prevent these 'freezing' actions? wtf
Does anyone on this website realize there are different types of crypto coins?
I am always amazed how little knowledge and cargo culting of 2017-era bitcoin knowledge is prevalent on HN. Whatever you monetary feelings towards crypto is, the technical aspects are fascinating. But most of the time HN gets it wrong.
TBH, the more you know about the technical aspects the less fascinating it gets.
Smart contracts and stablecoins by extention sound technologically interesting, but at the end you always rely on trusting people.
The core of the financial system is about managing trust and therefore a social issue, not a tech issue. It'd be nice if more tech nerds would internalize that tech can't solve social issues on it's own
Stablecoins are centralized and of course rely on trust - you need someone to exchange whatever asset they promise to guard for your tokens. I find them fascinating (in conjunction with the lighnint/taproot assets over bitcoin) and not necessarily unsafe.
In the freebanking era that the US had (before the FED was founded) every bank emmitet their own dollar. And, of course, there were banks over-issuing and bank runs left people without their assets. But that was before we had free flow of information and the internet. In todays world you can monitor and trade stablecoins, market cap, exchange rates in a freebanking system in sub-seconds. Any erosion in trust will immediately result in price fluctuations. We need a digital freebanking era, and it is a shame the genius act fell through. Exporting the dollar to people without access to banking would benefit the US (but I get that it currently mostly benefits trumps family).
I would not consider USDT to be an example for transparency or free flow of information. The selling point of USDT is that it's pegged to the US doller. Users put at lot of trust in both that 1:1 ratio and therefore indirectly in the US FED.
But: Are you sure that Tether is actually backed by USD? It certainly isn't free information.
> cargo culting
I don't think you're using that term right. Not knowing how something works doesn't mean you're cargo culting.
People are not so knowledgeable about the other coins because the whole point of magic internet money is that it can't be controlled by anyone. If your entire account exists in some box somewhere under the control of some entity, how is that any different from a bank (which also mostly doesn't operate on cash but just moves bytes around)?
> People are not so knowledgeable about the other coins because the whole point of magic internet money is that it can't be controlled by anyone
Your problem is treating it as magic internet money. It is not - you literally have the sourcecode to truly assess how it works. Your account is not with some entity. Magic internet money is your bank account - if your bank decides to set it to 0 tomorrow it is "magic" - you have no idea how that happens, and you have no guarantee that it doesn't happen. Or when your credit card is suddenly blocked because your bank decides is "suspicious activity" - again, that is black magic.
Bitcoin is the opposite of magic internet money. It is deterministic to its core. As for other cryptocurrencies - well they are mostly open source so you can check them.
Example of cargo culting in HN is people claiming that there are no tokens possible in bitcoin (false since taproot assets landed in 2021), not anonymous (false also since lightning layer 2 network existed) or not able to "pay for your coffee" in bitcoin (again, bogus since layer 2 networks). This is all cargo-culted knowledge once learned and true in 2017, never to be revisited.
USDT is implemented as a contract written in Solidity, working over other network like ETH, and it has a blacklist managed by admins. Once address is added to a blacklist, you cannot spend anything from it.
yeah bitcoin indeed was