Quit keeping USDT stablecoins

I think many of you are aware that USDT and a lot of other stablecoins can be frozen for various reasons, but the stats might surprise you. I stumbled upon this cool site called blocksec that tracks frozen USDT tokens, and honestly, those numbers are likely to be even higher when we factor in other networks and chains. So far, Tether has blacklisted 8432 addresses and frozen tokens totaling around $4.40 billion across different chains, and that’s just since they started tracking! The first frozen tokens date back to November 28, 2017. You can check out more details on their site: blocksec.ai/usdt-freeze. There’s another site that highlights censorship issues with stablecoins like USDT and USDC: stables.rip. Here’s what I’m wondering: what happens when all those tokens get frozen? Some have been unfrozen, but that’s only 591 addresses worth $540.79 million. On the flip side, some tokens are just destroyed, totaling 1,966 addresses worth about $1.24 billion across various chains. The status of the rest is a mystery. Honestly, don't hold stablecoins unless you're okay with this risk. Remember, Bitcoin can’t be frozen.

USDT (tether) USDC (circle) PYUSD (paypal) All of them can be frozen, it's in the smart contract. I guess we should use DAI (rebranded to USDS) if we want a stablecoin. Bitcoin is the way, but sometimes we can't afford a fluctuating rate. Stablecoins still have a reason to exist.

I would imagine the frozen stablecoins would eventually get seized by law enforcement. They probably got frozen upon request too. https://info.sky.money/supply DAI used to be backed by USDC (at least some of it) so If it's backed by something that can be frozen... it's probably not the greatest option either.

This is correct, but I don't know any tracking stats for USDC, PYUSD and other tokens. Pleas note that anything on Binance crap chain cane be frozen, even native BNB coin and all assets on that chain. I wrote few months ago that 16 blockchains have freezing ability, and 19 blockchains have potential for that. Good catch. I was saying the same thing, but almost nobody listens

There is a risk, but it's only 57% and Circle can either freeze all of their USDC reserves or none at all, so it's a bit of a let it slide situation because imagine freezing $5b of assets just to partially hit someone's $10m? What are the other options? No real backing and you get TerraLUNA UST all again.

I think "unfreeze" or "destroyed" are actions after freezing (through authority approval process). "destroyed" will result in new issuance? however, their 1:1 physical asset reserve claim must be maintained.

I don't know if I, as a customer who holds USDT on all different exchanges, can be affected once my exchange deposit address gets frozen? I hold most of my USDT on 3 different exchanges. Well, I don't actually hold them but use them for trading futures. What do you think? I think I'm not going to be affected, I guess, since I am holding it on the exchange?

Not holding any stablecoins is always an option We can argue that fiat currencies in bank accounts can also be frozen, but that is impossible for cash in your hands. It doesn't matter how many addresses you have, they can freeze anything if they want, and excuse can always be some connection in past, ''dirty'' coins, etc.

Right, so if I need a fixed rate of 1:1 USD... I do what? Different needs for different people. The way to go is finding a middle term or the "least bad" solution, not exactly this. Warning is ok, though.

That's the best solution; centralized coins should be treated centrally. Store them in a regulated environment, and always transact off-chain. I only think the freeze will occur on exchanges if you don't acquire them through the exchange itself, or if the original coin was already flagged before being exchanged. Don't take those stablecoins into "the wild". The inherent risk is more threatening than the additional risk.

That's the crucial part I think when using stablecoins, to know that they can be frozen at any time, but I can bet that an average user has no idea that's even possible. With that being said, I do use stablecoins, but I am trying not to hold for longer period of time, in order to minimze the risk.

@dkbit98 Cash is not practical with a discussion like this. We can not have all our fiat in cash. It was said that DAI can not be frozen according to what has been discussed before on this forum regarding topics like this. But it is worth knowing that when USDC fell out of peg, DAI also fell out of peg. But what I am very surprised about is that people always do the opposite They prefer centralized exchanges, they prefer stable coins like USDT and USDC that can be frozen, they prefer P2P on exchanges while there are alternatives but most of them are not going for the alternatives which is the privacy way.

For me, I need an alternative. I hold stable coin always, not long term though, but I usually convert my fiat to stable coins. My local currency is shit. Its so unstable and can depreciate at anytime, so keeping savings I would like to use in 4-6 months in my local currency is not ideal. At the same time, since I want to use the money in a short time, keeping it in Bitcoin is not also idea. With this stable coins are my best option. I know it's centralised and I know it's not ideal, but what are my options? This is why I need an option. I cant hold huge amount of cash in my hand, but even if I coud, inflation will still affect it if the currency decides to depreciate again. Even at that, I simply can't hold most of my money in cash, it doesn't make sense. So I need an alternative.

If your deposit address is blacklisted, it would be because Tether believes the source of funds is from illegal activity. Your account is going to be flagged when they do a check with their chain analysis provider and it is likely that the exchange could be contacted by law enforcement. Tether can blacklist an address for any trivial reason, but it is usually done when you have done something very suspicious. If someone is in a position where they have an above normal probability of having their stablecoins frozen, it would not be a wise move to use centralized exchanges, or centralized stablecoins for that matter.

The three reasons Tether freeze USDT is because of law enforcement, regulatory bodies and those in connection to security incidents like exchange hack. The freeze is done for the government to think that they are following the law so that they can have high adoption rate. But individuals can not report scam to them. That is the reason you will see people scamming people obviously and they will have high amount of USDT that are not freezed. The freezing of a thing will only deceive people. If you get scammed, you will be seeing the USDT on the blockchain but Tether will do nothing.

Yeah. And, there is another concern for the newcomers and inexperienced people that scammers will attempt to sell some of the frozen tokens stored in hardware or software wallets as "discount" wallets and tell you all you need is a special key to unlock your funds!  Many people still dont understand that just because they see a balance on a blockchain explorer doesnt mean they will have access to the funds.

Here is another website showing how much censorship there is on stable coins, and that is happening more than people think. USDT Tether had over 8931 wallets blacklisted, with $3.12 Billion worth frozen tokens! USDC had 549 wallets blacklisted, with $119.3 Million worth of frozen tokens! On this website you can also check if any address is blacklisted: https://stables.rip/ STOP trusting stable coins and companies who created them!

by your guess, what % of those addresses were involved in some sort of illegal activity? i wouldn't be surprised if 90% of them were directly connected to known scam/rugpull/hack/blackmail wallets.

As far as I know if USDT is stored on a large proven regulated exchange they usually have strong protections. However, there are still risks because stablecoins aren't 100% safe money. All stablecoins are at risk of being frozen at any time if a regulator requests it for a specific purpose. Correct me if I'm wrong. You don't have to stop holding USDT altogether, but you should reduce your dependence and manage the risks well, especially if you're a trader who frequently holds stablecoins to store funds for futures trading. So perhaps it's more appropriate to reduce holding large amounts of USDT, as it's a good decision it's better to invest funds in Bitcoin than in stablecoins.

I would imagine things are done differently when exchanges are involved. Tether would probably not freeze it because that's technically not going to do anything. Instead, the exchange would block your account. And if you're doing something that would make Tether freeze your address, that thing most definitely goes against any exchange's terms of service.