Tether, the publisher of the stablecoin USDT, froze an amount equal to BRL 15 million (USDT 3,027,396) held at a hacker’s address.
The blocking of funds was carried out last Monday (10), about a week after the hacker stole BRL 126 million in an elaborate scheme from bots known as MEV.
However, Tether’s decision drew criticism from the community. As a highlight, many point out that the real scammers are these bots that take advantage of all other users on the network, but they remain free.
How can a cryptocurrency freeze funds?
Unlike cryptocurrencies such as Bitcoin, the stablecoin Tether (USDT) is a token controlled by a smart contract. In such a contract, Tether (the eponymous company behind USDT) has permission to block all addresses.
That is, although Tether’s transaction history is immutable, the censored hacker can no longer move his USDT. After that, Tether can reprint that amount and refund the amount to victims, for example.
In other cases, where the issuer has no such command over the token contract, it has happened that projects left their original contract after a major hack to create a second one. That is, there is a huge centralization in such projects, unlike Bitcoin.
Tether freezes hacker’s address with R$15 million in USDT
This isn’t the first address frozen by Tether. In total, the company has already banned 865 addresses, totaling USD 456 million (R$ 2.2 billion). However, such censorship is not unique to Tether. The stablecoin USD Coin (USDC) has 159 banned addresses, a total equal to BRL 42.7 million.
While the feature is useful because it can serve as a counterattack, it is also controversial. Edward Snowden spoke on this topic in 2021, criticizing the practice of centralized stablecoins.
“A stablecoin that is blacklisted is not a stablecoin in my opinion”
The controversy resurfaced this week when Tether froze 3 million USDT (R$15 million) from a hacker acting as an Ethereum validator.
In short, many argue that the decision was arbitrary. After all, the victims of the hacker whose money was frozen were bots that are considered the real scammers, but have never been censored by anyone.
“Seems reasonable to blacklist MEV bots as well”, noticed one of them.
Finally, on the date of the hack, a user noticed “there is always a bigger fish” while referring to the hacker who stole the bots considered untouchable until then. Now, with its frozen funds, Tether seems to be this new bigger fish.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
