Bitcoin Forum

EDIT: Alright. Unexpectedly ended up being quite a slightly long write-up. When I first started writing this I thought it was only going to be a few sentences long. Trust me though, this is quite important information.

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EDIT #2 (July 9, 2020): Let's just say, I told you so?


Article: https://www.coindesk.com/circle-confirms-freezing-100k-in-usdc-at-law-enforcements-request

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I've been wanting to do a quick post here on Bitcointalk a month ago about this, but I lack information on other stablecoins besides Tether(USDT) so I delayed and delayed and delayed the posting further. Thankfully, and coincidentally, someone made a good Medium post about this just days ago, with the chart below.

This might be common knowledge for some, but I'm going to assume that a good number of people still doesn't know this yet. But most stablecoins can be freezed. Yes, even on your wallets. People might think that just because they're holding a certain cryptocurrency stablecoin on their non-custodial wallet, that they're already unseizable.

Well, that's unfortunately really not the case.

Here's a quote from the article:

While as far as I know(correct me if I'm wrong) we haven't read anything anywhere about a certain crypto person's stablecoins getting freezed(besides the ones in the linked article), it's really not impossible from happening. It just might be the matter of 'when' we're going to see someone get their stablecoin funds frozen.


Increased regulations

It really won't be surprising if the government of whatever country(not only in the United States) sometime in the future began to crack down and become A LOT more stricter when it comes to bitcoin and cryptocurrencies in general. Is it possible for the government to ask these centralized entities to freeze the stablecoin funds of certain(or all) holders and demand KYC/AML information? Definitely really really possible(in my opinion at least). In fact, I think that there's a high likelihood of this happening sometime in the future.

Single Collateral DAI(SAI) and Multi-Collateral DAI(DAI)

Besides USDT on the Liquid network(which isn't really THAT accessible right now, hopefully in the future), the DAI/SAI stablecoin, which is both from the MakerDAO project, are the only stablecoins on the list that's unfreezable as you may see. It's definitely a very interesting project and is working fine at the moment; but remember that it's FAR from perfect. In fact, not even close. While historically, in it's almost 2 years of existence, it's value stayed really close to $1, which is good, but there were times that it's price pumped to $1.06 and as low as $0.95, which is definitely something that you wouldn't want in a stablecoin.

Also, not because DAI/SAI are unfreezable right now, it doesn't automatically mean that it will be like this forever. Remember, there's still a single core team working on this project, and they can easily change the code today if they wanted or needed to. Not because they're bad people per se, but they might need to comply to government's requirements sometime in the future.

Final thoughts

I'm not saying that you should hold stablecoins, but I think that people just need to be more aware of the risks they're taking when holding completely centralized stablecoins and sort of "semi-decentralized" stablecoins. Remember, while "semi-decentralized" stablecoins might be the right choice, remember that black swan events can really cause it to have it's price either rise or crash. So if possible, it'd probably be a better idea to hold actual non-crypto USD. Use this information for your own benefit, Bitcointalk peeps. In the end, what you hold still completely depends on you. If something happened sometime in the future, don't say I didn't warn ya.  ::)

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EDIT: Just to add more information:

The possibility of your assets getting frozen is quite unsettling for holders of any currency and shows how centralized such coins really are. They primarily function as fiat currencies which are run in the blockchain and adhere strictly to all regulatory laws.
An article I found also claimed that some addresses have actually been frozen holding assets of about $41 million
And the exact reason for the freeze was not made public. In my opinion the demerits of stable coins outweigh the merits.

Definitely really really unsettling, and knowing the marketcap of Tether(USDT) alone, which is currently at 4.1 billion USD, I'm afraid majority of people don't know the fact that the funds can be freezed, heck, I don't even think that most people know the shadiness of Tether!

I didn't know that stable coin could be froze by the team itself, thanks for the great information.

This will convince the traders to stop holding USDT or other stable coins which has high volume at the moment?

I always suggested to use stable coins to cashout profits from trading and convert them back into decentralized coins sooner after the trend changes on prices but its definitely not a coin to hold on wallets.

I didn't know about the freezing options so thank you for creating this thread. Although I don't usually hold my assets in stablecoins it is good to know.
So for those who need stablecoins it's better to invest in DAI or Tether only on the Liquid platform.

The value of DAI varies. It's normal. I remember reading about DAI a long time ago. When the value of DAI is above $1 there is an incentive to create more DAI, sell it and make a profit. This will then lower the price to the $1 region. When the price is below $1 they do the contrary, they buy more DAI which increases the price. 

when something is centralized, you must assume that it already has that option or an option similar to that. in short "being centralized" means a third party having full control of the system and you are a simple user of that system they control. and that doesn't stop at stable coins, it will be true about any centralized coin (eg. XRP) or service (eg. centralized exchanges).

unfortunately since nothing horrible has happened yet, people tend to have a false sense of security about stable coins and end up using them in the wrong way such as storing!

Ehh, I really don't think it will convince traders in general. It's going to take so much effort to get these kinds of information out there even though it's completely necessary for everyone to know this.

As for day trading, I have no problems with it. You're most likely going to completely be fine as long as you don't hold it for too long. I hold stablecoins for a week in maximum most of the time.

Ah yes. The typical "it hasn't been hacked" reasoning. The same exact thing people said in the past with MtGox and with Bitfinex.

So far, I've always thought that stablecoins are always anonymous and their owners have full control over them, this is one of my misguided knowledge.
I usually hide my assets in USDT when the market is in a slump, although everything is fine up to now but maybe I should pay more attention to stablecoin holdings.

There's a lot more risks with stablecoins, and they all stem from their centralization.
The company can be closed by the government if they feel like it doesn't fully comply with regulations, or if they think it threatens their control over the economy.
The company that manages the stablecoin can execute an exit scam or just fail for countless reasons, and the holders will end up with worthless tokens.
The underlying fiat currency can fall in value.
The company can stop their operations in certain countries and freeze the coins of individuals from those countries.
The company can get hacked and attackers may steal coins, customer data or cause other damage.

Thanks for your post I didn't know until now that those stablecoins has the ability to froze our funds except DAI. It really feels uncomfortable and unsafe holding these stablecoins if it's really true. I will be reading the medium post and look for its basis or source. But I guess it is still safe if you are using it on exchanges for trading. Lools like DAI is a better choice in terms of stablecoins.

A coin is stable because it is controlled by some authority. You might have heard the tether fud few month back and it was not fully backed by USD. You can trade with these stable coins but never keep your funds in them for long time. If you cannot keep your funds in Bitcoin and want to keep them in USD, go for the fiat which is more reliable than these coins.

Well, yea. It's really debatable. It's pretty much the risks of funds being frozen(centralized stablecoins) versus the price instability and the no guarantee of 1:1 peg(DAI/SAI). It mostly depends on what risk you're willing to take. Personally in the short short term, I'd go with centralized stablecoins like TUSD(because Tether is just too shady). But long term, I'd hold fiat and not neither. I'm still just not 100% convinced with DAI/SAI.

one of the problems with these other stable coins is their lack of liquidity and sometimes adoption by exchanges. since one of the usages of the stable coins is for moving funds between exchanges, using Tether is the only option in most cases since the other exchange may not even have anything else. so eventually everyone sticks with the shady option.

I think only those funds are freezed which are suspected that they are involved in hack or illegal activity. Not sure, but your article hits the brain hard.

Stable coins are the safe one during sudden bear or bull market now need to think on  :-\

Stablecoins are a slightly better option than holding fiat on an exchange (assuming one stores them on a hardware wallet), since no one can socially engineer an exchange to perform an account takeover, but it still requires the holder to trust the entities behind them not to go down, not to freeze the stablecoins for spurious reasons, and that it will be possible to exchange them back into BTC or fiat without new requirements (stringent or more onerous KYC, etc.) being introduced in the future.

The fact that they can be stored on a hardware wallet may lull some newbies into a false sense of security, so watch out.

I was thinking before that stablecoins can somehow become a safe haven when a bloodbath happens in the market and it can be a good alternative then just converting your coins directly to fiat. But given that they have an "asset freeze" capability and on this scenario where such a bloodbath happens then it is much more scarier to hold stablecoins when they can freeze your crypto at any given time. What if you are trying to cash out your USDT because it is now being affected by the market or it suddenly going down then Tether suddenly decides to freeze everyone's wallet then you are basically screwed.

By freezing means the government will force these centralize entity to edit the smart contracts of these stablecoins?

I wonder what could be done to unfreeze too. Because if it happens that you just converted all your BTC to stablecoin since the prices started to crumble but only to see yourself without funds anymore because the thousands you got are immovable.

Don't forget the biggest risk of all, which is that of insufficient collateral. We know for a fact that Tether isn't backed up anywhere close to 1-to-1 as they claim, and the fraction of it that is backed up is backed up with a variety of non-cash assets, including assets which don't even exist yet such as interest payments on a loan they made to themselves. Totally not shady. ::)

It usually means that somewhere within the smart contract or code for these stablecoins there already exists a mechanism which allows the centralized entity controlling it to freeze coins or addresses at will.

I always been sceptical about stablecoins and I never hold any of these. There is quite many reasons like liquidity, centralization and etc why I don't like it, but I didn't knew that funds can be frozen. So, thank you for posting this stuff. But maybe this thing doesn't looks like something unexpected, because it's centralized cryptocurrency and I don't have any trust in it.
But seeing how big Tether marketcap is, it's worrying thing. Imagine them colapsing one day...

True. The next stablecoin with the highest liquidity next to USDT($6.1b volume) is USDC($30m volume). While USDC's volume is far less than USDT's, it's really not THAT bad. As long as you're trading with USDC:bitcoin and not some altcoin(probably besides ETH), you will probably be fine unless you do a huge transaction.

Well, that might just be what they claim. I'm not going to conclude that all these centralized companies that control these centralized stablecoins are evil, but even if they're not, they will have no choice but to obey if the government asks them to do things like freeze funds for whatever reason.

The information in this thread should be shared to spread awareness so I took the opportunity and translated your thread into Croatian for the local community to know.
The link to the translation is here > https://bitcointalk.org/index.php?topic=5204334.0

Thanks again.

^ I've done the same for the Italian Local Board https://bitcointalk.org/index.php?topic=5204358.0

Thank You for sharing this very important information

Best regards

The most notable refusals for redemptions have been Gemini and Paxos and in both cases it seems it was at least partly to - “maximize their status on CoinMarketCap.”

https://www.coindesk.com/winklevoss-crypto-gemini-gusd-stablecoin-redemption

https://www.ccn.com/paxos-standard-hassling-ethereum-traders-trying-to-redeem-stablecoin-pax-for-dollars/

Would you want your wealth tied up in something worried about how it looks on some piece of shit website?

When you consider how anal they are about conventional banking the anality will go up by an order of magnitude when it's their 'own' money.

That's even worse than I thought, it doesn't show them in a good light and proves they're no better than their competitor Tether with its untrustworthiness. OP should include the info.

Thanks. I knew they were shady, but I didn't know they were THAT bad. Added your message to the main post for more visibility.

Going to bump this. While bitcoin is volatile(as per usual), take note of the risks you're taking when you're holding stablecoins(and NOT real USD).

MakerDao was on verge of shutting down with ethereum's recent flat crash, these stable coins are not 'stable' as we think.

Further reading:

1) https://insights.glassnode.com/what-really-happened-to-makerdao/

2) https://www.coindesk.com/defi-leader-makerdao-weighs-emergency-shutdown-following-eth-price-drop

bad code, congested network, and unresponsive oracles made the issue worse, but the real problem is DAI's entire model of leveraged ETH-collateralized debt. DAI CDP holders face the same risks that ETH margin traders/lenders do---a flash crash without sufficient bid liquidity = mass defaults. if ETH crashes hard enough, DAI holders are fucked. to save them, MakerDao would have to remove the peg or print MKR tokens and auction them for DAI to cover the shortfall.

it's either not a stablecoin, or it's not decentralized, take your pick. maybe DAI can't be frozen like USDT but it's got its own set of serious problems!

this is really an Eye opener and i learnt this today. we can collectively say that it is not save to Hold stablecoins because your KYC might be required to claim it back. it is also another way of saying that the stablecoin tokens are centralized.
there are questions begging to be answered here. Are users required to perform KYC once or multiple time to claim their coins? what if the company is not satisfied with the KYC of the coin owner.

The situation with centralized stablecoins is much the same as centralized exchanges. In general, you would only need to perform KYC once. However, we're increasingly seeing instances where both exchanges and stablecoin issuers are freezing accounts and demanding additional due diligence about income and funding sources. If they don't like your answers, they close your account but usually return your money.

I believe this is because exchanges and stablecoin issuers are implementing the type of risk-based AML demanded by FATF rules (http://www.fatf-gafi.org/documents/riskbasedapproach/?hf=10&b=0&s=desc(fatf_releasedate)). As time goes on, I expect cryptocurrency service providers to become increasingly careful about who they do business with, for fear of crossing banking and AML regulators.

Yea it's really unfortunate. Though I was always heavily skeptical of MakerDAO due to it's huge potential to break down when black swan events occur(like what we had recently), I've always found it really really interesting. Unfortunately it's the only "stablecoin" we have right now that's unconfiscatable(correct me if I'm wrong).

I am completely unsurprised by what happened there. When it comes to things like this there is one rule - if the potential to screw up badly is in there somewhere it will happen and there will be someone at the right time and place to exploit it. And if random events don't make it happen then someone will force it to happen.

No way do I trust ETH, any programmer or any contract to be dependable enough to run something like that where it actually counts in the real world. It's all too amateurish still. Things like this should remain a research project until it's totally bulletproof and maybe it never will be.

It's good for research purposes that it happened. Things will be learnt. Not good for the people who got boned by it.

it's certainly been a learning experience. i never realized how dangerous DAI was. the underlying CDPs are prone to margin flash crashes. at first i thought "oh well, that's the risk CDP holders took, at least it only affects them". but like any situation where liquidations can't be absorbed by the market, (https://bitcointalk.org/index.php?topic=5151636.0) borrowers aren't the only ones who suffer. the flash crash screwed over DAI holders by leaving $4.5 million of unbacked DAI in the system.

and we all thought tether was the only stablecoin that wasn't fully backed. :P

I totally agree with this. I'm a bit interested in Ethereum, but there's no way I'd invest money in ETH. I'm just watching in the sidelines as of now and I really don't see that changing anytime soon. Seriously, if only the Ethereum people wasn't like immediately concluding that Ethereum is this super wonderful thing that's guaranteed to succeed in the future(and shitting on Bitcoin because apparently everything should be using a blockchain lul), Bitcoin maximalists wouldn't be shitting on it.

Giving this a bump.

https://www.theblockcrypto.com/linked/70850/centre-appears-to-have-blacklisted-an-address-holding-usdc-for-the-first-time

100,000 USD (C) frozen.

I wonder what the story is behind this.

As ever these things are nothing more than Paypal with extra paranoia and desperation to yield to The Man. There'll be plenty more of this in future.

Ironically this is likely to fortify Tether's position.

I'd seriously rather use a bank than storing my fiat money in a stablecoin, a bank is less likely to go down, and in the event it does there's even some chance to get some of your money back. Banks can even get bailed out by central banks, but with stablecoins you get all the downsides of centralized custodians, plus some of the downsides of crypto, like managing your private keys, and then there's no of the benefits, like legal protection, deposits, cashback, etc.

At least with PayPal you have reliable support, you are quite sure your $1 will still be worth $1 tomorrow and can solve any issue way faster. Have problems with a cryptocurrency? Good luck getting out of your own sh*t fast enough without having to be considered some sort of criminal by the authorities.

Only few days ago did I say over here that stablecoins may be good short-term "safezones" for Bitcoin parabolic changes. I'm now taking back my own words. Better have a 30% overnight paper loss than have 100% of your balance frozen and blacklisted.

Bump! Here it is ladies and gentlemen, as far as I know this is the first. But yea, think. twice. when. holding. stablecoins.


Article: https://www.coindesk.com/circle-confirms-freezing-100k-in-usdc-at-law-enforcements-request

It shouldn't be surprising and since it's their toy, being at their mercy should be expected.

The problem is at whose mercy you are. Circle's track record is not one of competence and none of these operations are accountable or approachable. They're also terrified of triggering their legacy masters and you're the one stuck in the middle who'll pay the price for that. You have the odds doubly or triply stacked against you.

At least with a normal bank you have a place to cover in cow shit in protest and identifiable people to blow up. With stuff like this you're nothing but an ignored email.

Until someone did something that attract government attention and Tether will be pressured to do similar action.

Shouldn't really be surprising indeed, but a lot of people shrugged this off because they haven't heard of such occurrence in the past. Well, here you go. I really wouldn't be surprised if at one point the wallet-locking occurrences will be no different with how much PayPal accounts are being locked.

I seem to recall Tether cancelling hacked balances but other than that it would be interesting to see how they handled such a thing.

The main difference between Tether and everything else is them effectively giving up the dollar redemption. You have to find a third party mug to do it.

All they're doing in the main is operating a standard ERC20 token. Not having to deal with banking for regular dweebs, other than their own druggy banking to initially fund it and the tiny inner circle who they presumably do allow to cash out, is going to massively reduce their twitchiness.

I'll guess the standard stablecoins regard themselves as extensions of the dollar with all the terror that entails. Tether are probably the opposite.

and more USDT will be frozen https://cryptobriefing.com/tether-can-freeze-your-usdt-39-addresses-containing-millions-blacklisted/
just wait for it

PayPal and similar services masquerading as banks are not exactly a paragon of reliability. PayPal especially is infamous for freezing funds for 6 months for spurious reasons.

if you think about it, holding USDC is really no different than holding USD at coinbase. they are both just centrally issued IOUs from an exchange. freezing and confiscation were always a possibility, especially when you consider potential requests from law enforcement. i was always curious about the exact method of confiscation. i guess now we know.


i was surprised to find out recently that tether has actually blacklisted significantly more. there are dozens of blacklisted (frozen) addresses totalling ~8 million USDT. https://twitter.com/PhABCD/status/1281054838172848128

I presume most of that is straightforward theft more than anything, as quite possibly the USDC one is too. Some are theorising in that Twitter thread about there being something wrong with the addresses themselves but I know zilch about ETH and wouldn't think that was possible. Nowt would surprise me though.

Looks like another address containing another $1.5 million USDT was just banned yesterday. You can keep track using this dashboard: https://explore.duneanalytics.com/public/dashboards/3zhIaRUCFgmZMKqHG0pguvSvw1aOGL8gxFtZ2ujf

Call me cynical/crazy, but maybe this is how Tether get out of the fact that they have printed millions of USDT out of thin air which aren't backed up by USD, or indeed, by any asset whatsoever. Permanently blacklisting an address like this effectively burns the coins and removes them circulation. Nice easy way for them to renege on some of their commitments.

My guess for those moves are theft, technical reasons and general housekeeping.

Since they have an official burning process there's no need to blacklist anything to 'remove' them. That also increases paranoia about their activities, which they probably don't care about, but I doubt anyone would want to foster it.

But 40 addresses containing a combined almost $10 million USDT have been blacklisted going as far back as 2017, and this is the first we're hearing about it. Given the Tether is a complete scam from top to bottom, I wouldn't put something like this past them.

Centralized exchanges freeze accounts and seize coins all the time with very little blowback from the community. No reason Tether can't do the same. I also wouldn't be in the least bit surprised if Tether started demanding KYC and proof of address ownership from various people in return for having their addresses un-blacklisted.

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. 

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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

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.

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 ?

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.

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.

This thread shines some light on DAI but it also says that even DAI has different risks to be considered.


Yeah that's right but as pooya87 mentioned it's not with all the banks and all the customers.
I think the best thing to do would be to diversify in a way where we can hold stable coins, hold some in fiat etc..
At least it would diversify the risks.

"Circle freezes USDC funds in Tornado Cash's US Treasury-sanctioned wallets"

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

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.

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.

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.

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.

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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.

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.

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.

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?

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



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


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


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


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.

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

Nope.

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.

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.

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.

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.

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 (https://www.coingecko.com/en/categories/stablecoins)

many of them don't feel good:

https://i.ibb.co/KsZN8dZ/1311.jpg (https://ibb.co/rpPbXYP)

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.

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.

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.

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 (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.

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.

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?   

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" :)

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