To a Law Enforcement Request, Stablecoin Issuer Centre Froze an ETH Address Holding $100K USDC
July 9, 2020 2:45 pm
Centre, the company that issues the stablecoin USD Coin (USDC) has confirmed that they blacklisted an Ethereum address holding $100,000 in USDC in response to the request from law enforcement.
In the first of its kind, the address had a “blacklist(address investor)” function called on June 16, 2020. The reason behind the law enforcement request is not yet clear, but Centre Consortium — founded by Circle and Coinbase — did release a statement confirming the blacklisting:
“Centre can confirm it blacklisted an address in response to a request from law enforcement. While we cannot comment on the specifics of law enforcement requests, Centre complies with binding court orders that have appropriate jurisdiction over the organization.”
A Crypto Thief
Although Josh Hawkins, the spokesperson of Circle, told that he could not provide any specifics about the blacklisting, it seems the address could be involved in other cryptocurrency theft. Under the comment section of a different address, a user claims the owner of the blacklisted address stole other tokens from them:
“Hello unknown thief, you are in contact with this eth address 0xEeC84548aAd50A465963bB501e39160c58366692 and you stole 10,000 Loopring Coin (750 euros) from my wallet. I am now giving you a chance to send the 10,000 Loopring Coin back to me. You already know my eth address. If you do not do this, I will report you anywhere with your 2 known addresses.”
More Will Come
Last week USDC broke $1 billion market cap, making it the second-largest stablecoin behind Tether (USDT), and Twitter users likening stablecoins to centralized fiat currencies, suggesting what can happen to USDC can happen to any other stablecoin.
A different user affirmed that Dai (DAI) could fix this issue of centralized control, still, they were also invalidated with the fact that DAI is backed by USDC and other centrally regulated digital currencies.
Stands for Censorable
Normally funds held on the Ethereum blockchain are controlled by the address owner, however, with USDC, an address can be blacklisted which limits them from performing transactions (sending or receiving) through the USDC smart contract. Although technically reversible, Circle’s website suggests that blacklisted addresses may be “wholly and permanently unrecoverable.”
This has raised concerns among the community surrounding censorship with a user lamenting on Reddit: “Central government control and censorship is just going to get worse.”
Another user commented on Twitter saying the “C” in USDC “stands for censorable.”