Many CryptoCurrency exchanges now support StableCoins. But, lately many StableCoin addresses are being frozen by issuing authority. I would like to know, can they freeze StableCoin addresses of exchanges as well, e.g. Binance or BitMex, i.e. exchanges that allow non-KYC trading? If yes, how will exchanges deal with such cases and who will bear the loss? Because, the user who deposited those tainted StableCoins to the exchange, may just convert it to BTC and already withdraw before it is frozen.
Ref 1: https://www.coindesk.com/circle-confirms-freezing-100k-in-usdc-at-law-enforcements-request
Ref 2: https://tokenpost.com/Tether-freezes-40-addresses-containing-millions-in-USDT-5623
Ref 3: https://thenextweb.com/hardfork/2018/09/20/stablecoin-backdoor-law-enforcement/
Update: Many seems to have misunderstood my question. My question is from exchange's perspective. I am explaining it below...
Let's say User U has deposited S StableCoin in Exchange E without KYC. U then converts S to Bitcoin B and withdraws from E. E moves deposited S to its cold storage with more S. Now, issuing authority of S gets a court order that U deposited stolen fund to E, which is now sitting in E's cold storage of S. So, issuing authority freezes the cold storage. Not only the stolen fund is frozen, but also the whole cold storage worth over million dollar is now locked. In this scenario, what would E do?
Topic: Can StableCoin address of a CryptoCurrency exchange be frozen? - page 2. (Read 294 times)
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