Topic: [UPDATED] PSA: Most Stablecoins Can Be Frozen, Even in Your Own Wallets - page 2. (Read 2345 times)

As you worried about the central entity will freeze your money, this mean you're not good enough to believe anything that centralized. I would recommended to use decentralized stable coin e.g. DAI.

Based on his post, it seems he come from India where the government often ban and unban Bitcoin so easy like flip a coin. Your choice is good if you live on a country that doesn't did Bitcoin legality drama, but it isn't a good choice for him.

That depends on a lot of factors, it is not like all the banks all around the world are freezing all crypto owners' bank accounts. Sometimes it is the country's laws that mandates such things, sometimes it is tax evasion, sometimes it is just the number of transactions and their sizes that raise some red flags and sometimes they are sending or receiving money to places that raise red flags leading to the bank suspending their accounts.

I'd still go with banks if I had to choose between them and stable coins.

I was just browsing across threads related to stable coins and found this one. This is a wonderful post.
So to conclude that the options for stable coins are too slim and still are risky.
I wanted to know which stable coin should I be holding when there comes a need to sell my coins to buy them back later.
But holding stable coins for a long time will put me at more risk. We can exchange the coins to fiat money but then there's the hassle of withdrawing to banks.
At the same time, there are times when the banks can freeze our account too in case of suspicious activities.
I have read cases where crypto holders' bank accounts had been frozen in my country.

So there's basically nothing to do ? Either take the risk of stable coins or the banks ?

Apologies for the late reply.

I really wouldn't say that. DAI is far more trustless because it doesn't have a freeze function, but DAI is significantly backed(collateral) by USDC, so there might be some price stability problems for DAI if Circle(the company that backs USDC) somewhat interferes.

In summary, DAI isn't necessarily better or worse, it just has a different kind of risk.

so would you say DAI is the best choice of a stablecoin to use it in a bearmarket?

What figmentofmyass said.

But mostly, I think it's really safe to assume that a significant number of USDT holders are people who earn bitcoin/crypto online(may it be through jobs/gigs/or crypto trading), and wanted to hold USD, a more "stable" asset, and at the same time without being taxed for their income. Pretty much one of the reasons why some people hold BTC.

Thanks for your reply. This the answer i needed & make more sense imo.

1. fast settlement time. normal fiat exchanges can take days or even weeks to credit or fulfill fiat transfers. USDT can be deposited and withdrawn in a matter of minutes.

2. chinese traders need fiat hedging instruments because the government banned CNY/crypto trading. USDT being the most lax (AML wise) and liquid of all stablecoins, it was the obvious market choice.

3. no KYC requirements on secondary markets. so exchanges like binance, poloniex, kucoin, and chinese exchanges can allow BTC/fiat hedging without verification.

4. the first 3 points reinforce strong demand for USDT markets from traders, making for thick order books. this further draws in more traders who naturally seek out markets with high volume and liquidity.

One thing that became a question in my mind. Why tether is still used in several large exchanges. Even most exchanges that trade perpetual still use tether as a reference. With all the weaknesses that tether has, why do the exchanges still use it? Mind t share the reason? Tbh, I'm still looking for the reason.

i'm not amazed really since it is expected. tether grew because it is filling a gap and will continue to grow as long as that gap exists.
this gap is two things. first is the need that altcoin traders have for something that has a "stable" value so that they can escape to whenever bitcoin rises or drops and causes the mass dump of altcoins. and second is another need that altcoin traders have for an easy, cheap, no KYC way of transferring value between exchanges.
if you compare the times when tether growth peaked with the altcoin market pump and dump periods you can see that the major rises were:
1. 2017 mass altcoin pump when every single altcoin even the long dead ones worth less than 1 satoshi got pumped
2. 2017 ICO mania where thousands of ICO were being created every month or so
3. 2018-2019 mass altcoin dump which was the reverse of #1
4. 2018 mass ICO death which was reverse of #2
interestingly enough tether was added to ethereum network to exactly be used for pump and dumping ICO tokens during the ICO mania by the end of 2017 and grow a lot during the ICO death spiral next 2 years.

this is also why i always found it very weird when people kept linking tether with bitcoin price when almost all of tether's volume (near 98%) and its main purpose is for altcoin trading.

the chinese seem to have a strong liking for tether, whether or not they are fully backed.

tether teaches us time and time again that market fundamentals don't matter all that much to price. it really doesn't matter if USDT aren't backed 1:1. what matters is that tether will redeem at 1:1 for large brokers and arbitrageurs (keeping the market pegged) and that there is massive USDT liquidity in the market, much bigger than other stablecoins.

You can still get a dollar or a dollar's value for it. That's what it's for and that's all that people care about.

I'm really amazed it's continued to grow but it's just another illustration of the willingness of people in this space to make the same old mistakes, and some sexy new ones.

Wait, what? I don't pay much attention to altcoins, especially not scam ones like Tether, but wow. Last I knew they had pumped up to $6 billion, but looking at the charts they printed another $2.5 billion in a single go back in May. That's crazy. I assume they provided proof of funds which was co-signed by an independent third party auditor, right? Nobody in their right mind would just let them inflate their marketcap by $2.5 billion out of thin air, especially when they still have an outstanding loan to themselves of $500 million, right? I'm sure Tether holders everywhere were up in arms about this.

I'm sure they are, but I'm also sure we will never know because Bitfinex will provide zero explanation of why they are remotely freezing users' addresses. Given that, there is nothing stopping them from freezing several more million USDT and providing no explanation.

USDT is a coin which can be remotely frozen or seized, is constantly being devalued by endless printing, and is only partially backed up by USD which in itself is also constantly being devalued by endless printing. I would be surprised that people are still using it, but then again, that's still not as bad as some altcoins.

that seems doubtful to me. there is less than $10 million USDT frozen---bitfinex makes as much in trading fees in a matter of weeks. considering $9.2 billion of tether has been issued in total, this amount of money is a rounding error, so i really doubt tether could be bothered with a scheme like that. as with the USDC freeze, these frozen funds are likely related to law enforcement requests---theft, OFAC sanctions, things like that.

It isn't that far from being impossible knowing that they can. It just scares me how a lot of people think this is not possible just because it's a "cryptocurrency" and that they're holding the funds in their own non-custodial wallet.

they know very well what happened to each exchange that suddenly did this while others weren't, how their users mass-migrated to the competition and they dropped from being far head #1 down to #10, #20,... and kept going down.
so i don't think we can expect such behavior anytime soon unless there were serious governmental pressure.

Whatever is the reason it is still possible for them to freeze your coin. You cannot justify such activity with a legal angle. I always felt the whole concept of a stable coin is a scam. Tether has been printing it for a long time just like fiat.