Comment by Tiberium

So USDT is a great amazing decentralized censorship-free drop in replacement to USD except:

- much more awkward to use

- more liable to hacks

- deposits are not insured

- fewer legal protections

- doesn’t pay interest (or not easily anyway)

- and as I find out, bannable by a central institution with lower legal oversight than the Fed

I’ll keep a mental note of this.

Turns out that there are quite good reasons to have a centralised currency after all. Who would’ve known.

Arguably any fiat-collateralised stablecoin is ipso facto centralised and trusted (someone needs to 1) issue the coins only against fiat collateral and then 2) hold onto that collateral reliably and 3) return it upon presentation of the coin), and at step 3 they can always say "no, we won't give it to you".

Decentralized is a great concept but it’s 99.9% rug pulls and you can’t get any safety unless you centralize. As an investor there is no way to protect yourself because the rug pulls are several orders of magnitude more sophisticated than most people’s understanding.

The U.S. government is the largest beneficiary of this service. More than $2.1 billion in USDT connected to or requested by U.S. authorities out of over $4.4 billion in total illicit USDT freezes globally.

Did they ever show proof that they actually hold $1 for every tether? This was big a few years ago but never heard anything about it since. (I could Google it but others here probably want to know)

If they baked in a function to freeze USDT, why not also add a function revert a transaction flagged as part of a hack?

I lost ~20,000 USDT by accident once and the CTO just sent me some freshly printed ones. That was many years ago though.

Anyone can refuse any bitcoin, too. But that's not implemented in the contract, just by how much real money people want to give you for bitcoin.

A shame that they can and do so here but happily facilitate transfers or scam victims, human trafficking and sexual abuse including of minors.

So when tether is blacklisted, is it reissued?

The financial system has evolved over 5000+ years and is like an endless series of Chesterton's Fences at this point. Here we find another: the ability for a regulator or a bank to freeze assets is once again proven to be a feature not a bug.

Managing a wallet where there is no recourse if your wallet is compromised is simply too difficult when even crypto exchanges get hacked and otherwise sophisticated people get compromised when taking cautious measures (eg [1]).

Crypto really is and always was a race to the rug pull.

[1]: https://www.straitstimes.com/singapore/about-3-5-million-los...

> waste of time

It seems like it took some number of minutes and scored billions, and at that point it was a matter of whether/how much they could trade out before it was locked. I don’t know how many minutes or hours it took to lock? If they managed to trade 1% before blocking, that would be an extra tens of millions. If 10% that would be hundreds of millions, etc.

Apparently [1], he managed to put them as collateral on a lending platform. That allowed him to borrow ETH. The way it works is that if you don't pay back the loaned ETH, the lenders can take the collateral. Except that here the collateral is itself frozen. So apparently, the ETH as now safe in the hacker's wallet and the lenders just lost a bunch of money.

I wonder why not swap them? And had he, would it have bricked the swap pool?

[1] https://x.com/czesmaill/status/2115988477905080716

In this case it looks like the attacker managed to swap some stablecoins into ETH before they were frozen.

I'm not clear whether the stablecoin providers will then be "creating" new coin to make binance whole - without which you've still fucked binance

It reveals what they are to the public. It's fake crypto with all the downsides of crypto but none of the upsides.

Poor fellas, barely enough for rent

Stable coins are not decentralized

Stablecoins only use the accoutrement of blockchain as smoke and mirrors to distract and confuse regulators, not because they actually benefit from it at a technical level. They aren't really decentralized at all and could just as easily be a database, except for the regulatory thing

nothing about crypto is decentralized. it's verified by enormous mining farms, who contribute hashes to centralized pools, all stored on one central ledger, and interfaces with the fiat/legit financial system only by using that very financial system.

oh, and three acounts hold like 25% of all btc in circulation.

crypto can do some things, but decentralization isn't one of them. just ask Coinbase

USD tether is barely crypto at all, it's a wrapper around treasury bonds which the US govt. regulates

Centralized stablecoins like USDT and USDC aren't layer-one cryptocurrencies like Bitcoin or Ethereum. They're more like applications running on top of other blockchains, usually as smart contracts, and their issuers hold admin keys which can freeze, mint, burn, and otherwise redistribute funds at will. As far as timing goes, stablecoin issuers can't actually cancel or reverse a transaction that's already in a block that's been mined, but they can freeze the receiving address afterward and burn the funds there, then reissue them elsewhere, which has much the same effect.

The smart contract for those tokens supports freezing. Tether just calls the freeze function on that address.

Most crypto assets are operated by a smart contract that controls every transfer. So the contract can decide to not perform certain transfers.

It doesn't, the hacker already loaned against it to get eth so they froze saves assets.

If people dont know, they should look up DAO hack and Ethereum hard fork.

USDT and USDC are both centralised crypto currencies with a single source of truth.

That's not the whole point at all. And there are truly wild west cryptos, but most people want some trustworthy regulatory body, whether it's a government or not, backstopping their funds when they get large enough.

For instance to unwind a 5 billion dollar robbery

Stablecoins are fiat on-chain and they are legal so they need to have the freezing mechanism in the smart contract otherwise they could go to jail.

So crypto + legal company means not really following bitcoin ideology anymore

At least a motivated person could audit the smart contracts on this. It isn't like it's a surprise when it turns out it's possible to freeze these coins.

this isn't crypto, it's US dollars with a techno-wizard sheen on the top for no reason

governments, banks freeze currency all the time

> Freezing crypto is so disgusting to me I don’t know…

The feature literally appears to have just saved over two billion USD from being stolen! I mean, fine, "disgusting" is subjective. But the need for the feature is real and quantifiable (and very large) and it did what it advertised.

It's so sad that it's inconvenient for you to commit fraud and tax evasion and pyramid schemes and rug pulls.

My heart goes out to you, along with these two definitely not Nazi salutes.

[dead]

Does anyone on this website realize there are different types of crypto coins?

USDT is implemented as a contract written in Solidity, working over other network like ETH, and it has a blacklist managed by admins. Once address is added to a blacklist, you cannot spend anything from it.

yeah bitcoin indeed was