The USD Coin (USDC) issuer may face further investigation by the centralized stablecoins cryptocurrency after it was reported yesterday that a stablecoin had frozen an address worth $ 100,000.
The de facto blacklisting of the address took place in June this year and was reportedly carried out by the Center - a collaboration between the Central cryptocurrency company Circle and Coinbase - "at the request of law enforcement."
"The center complies with mandatory court decisions that have the appropriate jurisdiction of the organization," district spokesman Josh Hawkins told Coindesk.
A special law enforcement inquiry, as well as additional details about the address, are not yet known. We contacted the Center for comments and if they respond, we will update the article.
In both cases, the news raised more questions about the stablecoin case.
Jake Chervinsky, chief consultant of the Decentralized Funding (DeFi) platform, called for a detailed explanation of the criteria used when deciding to blacklist an address of the center, asked whether the action was given in response to a court decision or voluntarily, and there is an appeal process.
"This is important: the USDC blacklist has moved from a hypothetical concern to a real risk," he said.
Already in 2018, Cryptonews.com warned that Circle reserves the right to blacklist USDC addresses and freeze funds if they are used for illegal activities. However, the situation is the same with some other stablecoins: both Tether (USDT) and TrueUSD (TUSD) have provisions stating that they reserve the right to refuse service to whomever they want without any explanation.
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Also, when a cryptocurrency is backed by a real-world asset - like most stablecoins - there is a risk of confiscation of the underlying asset, potentially causing the stablecoin to lose all its value, even if the money itself is not "frozen."
Despite concerns around the USDC, it seems that USDC users have not reacted to the news. Shortly after the news broke, the price of the USDC rose for as short as 0.65% in high trading volume against the USDT on the Binance exchange.
In response, cryptocurrency Luke Martin also said, "This news + this table confused me."
But others noted a lack of transparency and communication.
"The blacklisting of the USDC took place in mid-June and only now hit the news period. Is anyone watching the chain events happening? It reminds me that 51% of the ETC was attacked and only Coinbase was noticed because we were actually watching. More viewers we need it, "said Justin Mart, a data scientist working with Coinbase.
The news came after the USDC announced earlier this month that its market capitalization had reached $ 1 billion.
Stablecoins with market capitalization
