Centre, the company that issues the stablecoin USD Coin (USDC) has blacklisted an Ethereum address holding $100,000 in USDC in response to a law enforcement request. In the first of its kind, the address had a “blacklist(address investor)” function called on June 16, 2020.
It’s not yet clear the reason behind the law enforcement request, but Centre Consortium — founded by Circle and Coinbase — did release a statement confirming the blacklisting:
“Centre can confirm it blacklisted an address in response to a request from law enforcement. While we cannot comment on the specifics of law enforcement requests, Centre complies with binding court orders that have appropriate jurisdiction over the organization.”
A known thief
Although Circle spokesperson Josh Hawkins, said he could not provide any specifics about the blacklisting, it appears the address could be involved in other cryptocurrency theft.
In the comment section of a different address, a user claims the owner of the blacklisted address stole other tokens from them:
“Hello unknown thief, you are in contact with this eth address 0xEeC84548aAd50A465963bB501e39160c58366692 and you stole 10,000 Loopring Coin (750 euros) from my wallet. I am now giving you a chance to send the 10,000 Loopring Coin back to me. You already know my eth address. If you do not do this, I will report you anywhere with your 2 known addresses.”
They’re all the same
Last week USDC broke $1 billion market cap, making it the second-largest stablecoin behind Tether (USDT), and Twitter users likening stablecoins to centralized fiat currencies, suggesting what can happen to USDC can happen to any other stablecoin.
Another user stated that Dai (DAI) could fix this issue of centralized control, however they were also rebutted with the fact that DAI is backed by USDC and other centrally controlled digital currencies.
It’s all about censorship
Normally funds held on the Ethereum blockchain are controlled by the address owner, however, in relation to USDC, an address can be blacklisted which restricts them from executing transactions (sending or receiving) through the USDC smart contract. Although technically reversible, Circle’s website warns that blacklisted addresses may be “wholly and permanently unrecoverable.”
This has raised concerns among the community surrounding censorship with a user lamenting on Reddit:
“Central government control and censorship is just going to get worse.”
Another user commented on Twitter saying the “C” in USDC “stands for censorable.”