Circle CEO fails to dismiss allegations USDC users can be blocked

Founder of the Daily Gwei newsletter, Anthony Sassano, claims that USDC accounts can be blocked.

Expanding further, Sassano said USDC issuer Circle can freeze the tokens “in any address at any time for whatever reason.” He added that this is the risk associated with using any centralized service.

A lot of people are learning about the USDC blacklist function today.

To clear things up: Circle (the issuer of USDC) can freeze USDC in any address at any time for whatever reason.

This is the risk of using centralized stablecoins – just like using any centralized service.

— sassal.eth 🦇🔊🐼 (@sassal0x) June 18, 2022

Circle CEO and co-founder Jeremy Allaire responded by calling Sasson’s claims inaccurate and unhelpful FUD while linking a blog article posted in May, titled, “Why developers can trust USDC.”

Not accurate, not helpful FUD. Read more. https://t.co/lre6bebUFX

— Jeremy Allaire (@jerallaire) June 18, 2022

Stablecoins under fire

Recent events in the crypto space have put the spotlight firmly on stablecoins. In particular, the UST implosion, which collapsed 98% in value from its dollar price before being abandoned, sent shockwaves across the entire digital asset industry.

Since then, a spate of de-pegs, albeit not to the same extreme as UST, have investors nervous over the soundness of stablecoins in general.

This has been noted by mainstream publications, with the FT’s Hilary Allen, a professor at the American University Washington College of Law, going as far as questioning whether stablecoins should exist at all.

Similarly, the Bank for International Settlements (BIS) recently launched an “Innovation Hub,” which encompasses several projects that intend to explore cyber security. The press release states that the cryptocurrency market intelligence platform element directly responds to mitigating stablecoin and DeFi risk.

“The collapse of many stablecoins and decentralised finance (DeFi) lending platforms has highlighted the difficulty in assessing their risks and economic potential.”

Circle boss writes off USDC blocklist claims as FUD

Rather than address Sassano’s claims directly, Allaire linked a blog post on the merits of trusting USDC. It opens by referring to the UST disaster while using a series of Q and As to build a case for USDC being different.

Under the question, “If I use USDC in my protocol/application, can my protocol/application be blocked?,” the answer states, “Circle and the Centre Consortium only block addresses when we are legally required.” The response goes on to say this happens in respect of court orders and sanction compliance.

“Of the total $53B+ USDC in circulation, only $2.7M USDC is currently blocked. A total of 38 unique addresses have ever been blocked to date, all of which comply with OFAC sanctions and court orders.”

In addition, the post also states Circle has a legal obligation to enforce Know Your Customer (KYC) controls, monitor transactions, and watch for “sanctions screening.”

Sassano responded by saying the blog confirmed his previous allegation, even detailing the amount of funds currently being blocked. He signed off by denying this was an attempt to FUD the token.

This blog post details what's been blacklisted so far (requests by law enforcement) but this doesn't take away the fact that Circle *could* freeze any USDC they want to (I'm not saying that they *would*)

I'm not trying to fud!https://t.co/56aoaHYPKL

— sassal.eth 🦇🔊🐼 (@sassal0x) June 18, 2022

Mentioned in this article

USD Coin Ethereum Circle Jeremy Allaire

Author

Samuel Wan

Analyst at CryptoSlate

Samuel Wan, a finance professional turned full-time crypto content creator, values individual autonomy and personal freedom in his pursuits.

@WanSamuel Email Samuel

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