USDC has a backdoor that can freeze your assets, and it isn't the only one

25 Oct, 2018
by David Borman
USDC has a backdoor that can freeze your assets, and it isn't the only one

It's recently been revealed that the newest listing on Coinbase, USDC, has a backdoor built in to allow for the freezing and/or seizure of funds if it is believed illicit activity is involved. Of course, it is by no means the first to include this. Chepicap reported back when Gemini Dollars and Paxos were announced that they too contained a similar backdoor.

It is quickly pointed out on twitter that this issue affects other coins as well.

As is taken from the NYDFS press release concerning other recently launched stablecoins Gemini Dollars and Paxos:

"-Any stablecoin and/or the fiat currency available upon redemption of any stablecoin may be forfeited if the stablecoin has been, or is being used for, illegal activity.
-Any stablecoin may be subject to forfeiture to, or seizure by, a law enforcement agency in the event that there is a legal order or other legal process.
-Any stablecoin or fiat currency available upon exchange of stablecoin that has been subject to freezing, forfeiture to or seizure by a law enforcement agency, and/or subject to any similar limitation on its use, may be wholly and permanently unrecoverable and unusable and may, in appropriate circumstances, be destroyed."

While it is fair to say this is the price that comes with institutions and regulation coming into the crypto space, and in order for banks to trust cryptocurrency they need to be able to control it, AKA take it away if you aren't using it right.

Some will say this is a necessary step, while many crypto purists may feel this is undermining why Bitcoin was ever invented in the first place.

As always, stick with Chepicap for any developments!

Read more: Coinbase newest listing: Not Stellar or BAT, but Circle's USDC stablecoin, In addition to Gemini dollar, Paxos also launches its stablecoin today

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