[UPDATED] PSA: Most Stablecoins Can Be Frozen, Even in Your Own Wallets

Mauni98

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Quote from: dkbit98 on November 13, 2022, 05:41:01 PM

Quote from: mk4 on November 12, 2022, 01:15:54 AM

Just in: Tether freezes FTX's USDT holdings

Shitshow continues, and danger is even bigger if we know that Tether supply is mostly held on ethereum blockchain that is centralized, and it currently has 75% OFAC compliant blocks.
This means they can censor, block and freeze any address for any reason and without explanation, this is built in feature of ethereum PoS blockchain.

Quote from: mk4 on November 12, 2022, 01:15:54 AM

DAI can't be frozen, but DAI poses different risks(mostly depegs) as DAI is backed by ETH/USDC/etc. Totally up to you to weigh in the risks.

Maybe it's slightly better than other alternative in theory, but if it is still held on ethereum blockchain, and it is, than it can be censored and frozen at any time.

Quote from: mk4 on November 12, 2022, 07:31:23 PM

Solana actually has a more active blockchain in general compared to Tron despite the network downtimes. But yea, USDC is far more adopted than USDT on Solana. (source: Jupiter(Solana) and Sun.io(TRX) trading volumes)

This is probably all bots and fake transactions, and we all know this blockchain is 100% centralized so it doesn't really matter who is more active.

Quote from: nikola22 on November 13, 2022, 08:36:13 AM

so there are no reliable stablecoins for keeping your reserves without risks of loss? fully backed centralized stablecoins like USDC, BUSD and USDT could be easily frozed on request from regulators and other government agencies. partly backed and algorithmic stablecoins like USDD, Neutrino USD and USDX could lose peg during bear markets.

I am really surprised how Neutrino USDN held up until now, since it is only backed up by Waves altcoin.
It's not safe to keep anything in USDN or any other stable coins right now, especially not long term... or you make wake up one day and find your money

Are you sure?
Many others say DAI cant be frozen.

DrBeer

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The problem with stablecoins is that they "live" on the border of two worlds - the fiat world and the crypto world. This forces many of them to follow, follow unconditionally, all the requirements of regulators, financial structures of the state (state bank/fiscal system/....). And one of the rules of the fiat world is total control and management, including the process of blocking accounts. For this reason, blocking (freezing of wallets) and forced seizure have moved from the fiat world to the world of cryptocurrencies.
That is why PayPal USD smart contract has such mechanisms.
And the final will be the launch of CBDC - there will be absolute, total control..... But this is another sad story about how "everyone wanted blockchain and freedom, but blockchain and total control were born"

sima_sara

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to reduce chance of your tether being frozen, a friend suggested this:

1. receive bitcoin
2. convert it to BNB Bep20
3. send it to pancakeswap
4. withdraw it as tether on tron network

thoughts on this?

SquirrelJulietGarden

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Quote from: nikola22 on November 13, 2022, 08:36:13 AM

so there are no reliable stablecoins for keeping your reserves without risks of loss? fully backed centralized stablecoins like USDC, BUSD and USDT could be easily frozed on request from regulators and other government agencies. partly backed and algorithmic stablecoins like USDD, Neutrino USD and USDX could lose peg during bear markets.

anyone can look at current situation on stablecoins: https://www.coingecko.com/en/categories/stablecoins

many of them don't feel good:

Many of stable coins in the list, on the market were launched in past two years. They have not been tested enough by customers and market especially bear market with serious negatively conditions.

Latest depegs of newborn stable coins are bad for anyone who owned it in their portfolios but it is good for the market generally. Because bad stable coins should be eliminated from the market by depegs or similar serious market testings with real conditions of bear market.

As I stated my opinion, I would prefer to choose fiat currencies if I want to store my capital too long rather than choose stable coins. Especially I never touch newborn stable coins.

nikola22

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Quote from: dkbit98 on November 13, 2022, 05:41:01 PM

I am really surprised how Neutrino USDN held up until now, since it is only backed up by Waves altcoin.
It's not safe to keep anything in USDN or any other stable coins right now, especially not long term... or you make wake up one day and find your money gone.

yes, USDN is still alive but the future of this stablecoin is uncertain. like the future of WAVES which is currently trading just above $2: https://www.coingecko.com/en/coins/waves
though on Mar 31, 2022 WAVES traded above $60. for now keeping funds in USDN even more risky than playing roulette.

situation with HUSD also looks strange. Huobi decided to delist HUSD and it plunged to $0.15. so if some major exchanges decide to delist USDT in order to promote their own stablecoins the future of USDT may be similar to HUSD.

dkbit98

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Quote from: mk4 on November 12, 2022, 01:15:54 AM

Just in: Tether freezes FTX's USDT holdings

Shitshow continues, and danger is even bigger if we know that Tether supply is mostly held on ethereum blockchain that is centralized, and it currently has 75% OFAC compliant blocks.
This means they can censor, block and freeze any address for any reason and without explanation, this is built in feature of ethereum PoS blockchain.

Quote from: mk4 on November 12, 2022, 01:15:54 AM

DAI can't be frozen, but DAI poses different risks(mostly depegs) as DAI is backed by ETH/USDC/etc. Totally up to you to weigh in the risks.

Maybe it's slightly better than other alternative in theory, but if it is still held on ethereum blockchain, and it is, than it can be censored and frozen at any time.

Quote from: mk4 on November 12, 2022, 07:31:23 PM

Solana actually has a more active blockchain in general compared to Tron despite the network downtimes. But yea, USDC is far more adopted than USDT on Solana. (source: Jupiter(Solana) and Sun.io(TRX) trading volumes)

This is probably all bots and fake transactions, and we all know this blockchain is 100% centralized so it doesn't really matter who is more active.

Quote from: nikola22 on November 13, 2022, 08:36:13 AM

so there are no reliable stablecoins for keeping your reserves without risks of loss? fully backed centralized stablecoins like USDC, BUSD and USDT could be easily frozed on request from regulators and other government agencies. partly backed and algorithmic stablecoins like USDD, Neutrino USD and USDX could lose peg during bear markets.

I am really surprised how Neutrino USDN held up until now, since it is only backed up by Waves altcoin.
It's not safe to keep anything in USDN or any other stable coins right now, especially not long term... or you make wake up one day and find your money gone.

nikola22

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so there are no reliable stablecoins for keeping your reserves without risks of loss? fully backed centralized stablecoins like USDC, BUSD and USDT could be easily frozed on request from regulators and other government agencies. partly backed and algorithmic stablecoins like USDD, Neutrino USD and USDX could lose peg during bear markets.

anyone can look at current situation on stablecoins: https://www.coingecko.com/en/categories/stablecoins

many of them don't feel good:

SquirrelJulietGarden

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Quote from: mk4 on November 12, 2022, 07:31:23 PM

Solana actually has a more active blockchain in general compared to Tron despite the network downtimes. But yea, USDC is far more adopted than USDT on Solana. (source: Jupiter(Solana) and Sun.io(TRX) trading volumes)

I don't choose Solana or TRON network especially Solana that shown its under capacity to handle high transaction demands on its network. Some downtimes occured and caused effects and loses for NFT investors on Solana. I don't discuss about NFT projects here because they are not good with their origins but Solana is responsible for the network technical problems.

Their developers can not blame that NFT projects have falls because of their bad ideas, bad models, bad use cases. Congestions then downtimes on Solana contribute a lot to panic and falls of NFT projects.

About USDT, if I want to move it, I will pick Tron and after I finish it, I will convert USDT TRC20 to BUSD on Binance Smart Chain.

If I don't use BUSD, I will choose fiat currency.

mk4

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Quote from: Pmalek on November 12, 2022, 08:58:10 AM

You forgot about the most popular network for Tether which is Tron. I have honestly never heard of anyone accepting USDT over Solana's blockchain, especially if we take into account that its network has a history of downtimes. The fees over Ethereum were often quite big, which caused people to migrate more and more towards Tron.

o_e_l_e_o makes a good point. Holding USDT makes no sense if you have a way to swap your bitcoins for fiat.

Solana actually has a more active blockchain in general compared to Tron despite the network downtimes. But yea, USDC is far more adopted than USDT on Solana. (source: Jupiter(Solana) and Sun.io(TRX) trading volumes)

Rikafip

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Quote from: sima_sara on November 12, 2022, 12:55:48 AM

If you have received bitcoin from selling a property, and you want to convert it to tether, because you want to keep the value; how likely it is for that tether to be frozen?

What I don't understand is how exactly you plan to keep the value by staying in tether? Or you maybe meant that currency in your country is not stable enough so you would rather prefer currency that is pegged to dollar? Anyway, getting your USDT frozen is not the only danger as there is a chance of depeging as well and those two things make it a bad good choice for longer hodl.

Pmalek

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Quote from: mk4 on November 12, 2022, 01:15:54 AM

You can only hold USDT on Ethereum/Solana/BNB wallets.

You forgot about the most popular network for Tether which is Tron. I have honestly never heard of anyone accepting USDT over Solana's blockchain, especially if we take into account that its network has a history of downtimes. The fees over Ethereum were often quite big, which caused people to migrate more and more towards Tron.

o_e_l_e_o makes a good point. Holding USDT makes no sense if you have a way to swap your bitcoins for fiat.

o_e_l_e_o

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Quote from: sima_sara on November 12, 2022, 12:55:48 AM

how likely it is for that tether to be frozen?

The risk is non-zero, which is too high.

Quote from: sima_sara on November 12, 2022, 12:55:48 AM

would the case be different if I use USDC?

Nope.

Quote from: sima_sara on November 12, 2022, 12:55:48 AM

Would you trust Dai?

Nope.

If I wanted to hold bitcoin, I'd keep my payment in bitcoin. If I didn't want to hold bitcoin, I'd convert some or all of the payment to fiat. I wouldn't touch any of these centralized scam coins, especially not for a large value purchase such as property.

mk4

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Just in: Tether freezes FTX's USDT holdings

https://cointelegraph.com/news/report-tether-freezes-46m-of-ftx-s-usdt-on-tron-blockchain-setting-new-precedent

Quote from: sima_sara on November 12, 2022, 12:55:48 AM

If you have received bitcoin from selling a property, and you want to convert it to tether, because you want to keep the value; how likely it is for that tether to be frozen?

Unlikely especially if you're just a small player, but definitely not impossible.

Quote from: sima_sara on November 12, 2022, 12:55:48 AM

Tether is staying in the same wallet where bitcoin was received.

You can only hold USDT on Ethereum/Solana/BNB wallets.

Quote from: sima_sara on November 12, 2022, 12:55:48 AM

would the case be different if I use USDC?

More likely with USDC as they're more regulatory compliant as far as I know.

Quote from: sima_sara on November 12, 2022, 12:55:48 AM

Would you trust Dai?

DAI can't be frozen, but DAI poses different risks(mostly depegs) as DAI is backed by ETH/USDC/etc. Totally up to you to weigh in the risks.

Also, I'm not sure if you can actually get away with selling property and not declaring the sale.

sima_sara

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If you have received bitcoin from selling a property, and you want to convert it to tether, because you want to keep the value; how likely it is for that tether to be frozen? Tether is staying in the same wallet where bitcoin was received.

would the case be different if I use USDC?

Would you trust Dai?

mk4

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Quote from: dkbit98 on August 10, 2022, 12:00:08 PM

Stablecoins are not great but they could be useful temporary if they are decentralized, and they are not.
All stablecoins are controlled by central authority, and most algorithm bases stablecoins failed in this bear market and showed they are unusable.

Probably not great if you already have access to the USD to start with. Great for people who have shitty fiat currencies and want to gain exposure to a less-shitty currency such as the USD.

dkbit98

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Quote from: mk4 on August 09, 2022, 03:30:55 AM

Yea, expect things to get worse from here. Stablecoins are great, but don't trust them too much.

Stablecoins are not great but they could be useful temporary if they are decentralized, and they are not.
All stablecoins are controlled by central authority, and most algorithm bases stablecoins failed in this bear market and showed they are unusable.
Fake decentralized stablecoins like DAI are also dependent on USDC, so I wouldn't trust any stablecoins at this point.
One potential solution could be USD on Lightning Network (Stablesats) because there is no token, but there is moment of risk when BTC is swapped for Stablesats using centralized exchanges.

mk4

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Quote from: Charles-Tim on August 09, 2022, 07:16:54 AM

After reading the link by MK4 above, it means even innocent people are going to be affected. Some bad actors are making use of mixers, while some good people can also make use of it for privacy reasons. I am just thinking if I fall victim of this, that would be when I will know more that having full control over my own asset is so much important.

Just that many people are ignorant that many stable coins can be freezed. Satoshi created bitcoiin for privacy reason and for people that have it to have full control over their own asset (bitcoin). But after bitcoin was created, are other projects which belong to centralized organisations that are moving crypto that should be decentralized towards centralization. But bitcoin remain decentralized and acceptable.

Quote from:
https://www.theblock.co/post/162172/circle-freezes-usdc-funds-in-tornado-cashs-us-treasury-sanctioned-wallets

Among these addresses is Tornado Cash’s USDC pool, meaning those with USDC deposited on Tornado Cash may be unable to withdraw their funds.

If anything, the shutting down of Tornado Cash's website actually hurts the everyday person and not the hackers. The authorities just shut down the website, but the smart contract is still live and running on the blockchain. The tech-savvy hackers can just use tornado cash via command line lol.

Charles-Tim

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Quote from: crwth on August 09, 2022, 05:35:26 AM

Thanks for the resource. It's definitely going to be a problem for innocent people to be hurt by it as well. It's the fault of Tornado Cash and they would be the ones responsible for it. I do hope that they find a way to clear users and separate those who have dirty and clean funds.

After reading the link by MK4 above, it means even innocent people are going to be affected. Some bad actors are making use of mixers, while some good people can also make use of it for privacy reasons. I am just thinking if I fall victim of this, that would be when I will know more that having full control over my own asset is so much important.

Just that many people are ignorant that many stable coins can be freezed. Satoshi created bitcoiin for privacy reason and for people that have it to have full control over their own asset (bitcoin). But after bitcoin was created, are other projects which belong to centralized organisations that are moving crypto that should be decentralized towards centralization. But bitcoin remain decentralized and acceptable.

Quote from:
https://www.theblock.co/post/162172/circle-freezes-usdc-funds-in-tornado-cashs-us-treasury-sanctioned-wallets

Among these addresses is Tornado Cash’s USDC pool, meaning those with USDC deposited on Tornado Cash may be unable to withdraw their funds.

mk4

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Quote from: crwth on August 09, 2022, 04:45:14 AM

Since Tornado Cash has been "allegedly" involved in high-profile hacking, they are definitely out to be frozen with their USDC wallets.

With things like these, you wouldn't have to worry about it if you are not money laundering or the source is clean. I'm not sure how you can prevent unnecessary hiccups if you were to receive one or something.

Tornado Cash is a mixing protocol that people in general use, of course hacker entities in various sizes would use it. You don't necessarily need to be a money launderer to want privacy lmao.

crwth

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Quote from: crwth on August 09, 2022, 04:45:14 AM

Quote from: mk4 on August 09, 2022, 03:30:55 AM

https://www.theblock.co/post/162172/circle-freezes-usdc-funds-in-tornado-cashs-us-treasury-sanctioned-wallets

Since Tornado Cash has been "allegedly" involved in high-profile hacking, they are definitely out to be frozen with their USDC wallets.

With things like these, you wouldn't have to worry about it if you are not money laundering or the source is clean. I'm not sure how you can prevent unnecessary hiccups if you were to receive one or something.

Have you considered the sanction might hurt bystander? Even CNBC write an article about it[1]. Additionally, how sure source of your USDC (or other centralized token/coin) is clean when you don't receive it from regulated exchange or the company itself?

Thanks for the resource. It's definitely going to be a problem for innocent people to be hurt by it as well. It's the fault of Tornado Cash and they would be the ones responsible for it. I do hope that they find a way to clear users and separate those who have dirty and clean funds.

Topic: [UPDATED] PSA: Most Stablecoins Can Be Frozen, Even in Your Own Wallets (Read 2465 times)