Tether, a stablecoin issuer, has frozen $1 million in USDT

<p>Tether froze more than $1 million in USDT in a private digital wallet last week, effectively rendering it unusable.</p> <p>Etherscan, an Ethereum block explorer, revealed that the No. 1 stablecoin issuer froze the 1.09 million USDT on December 30.</p> <p>A Tether spokesperson told The Block that the action was taken at the request of an unspecified regulator or law enforcement agency. While the company declined to comment on the specific case, it did say that by "freezing of addresses, Tether has been able to help recover funds stolen by hackers or are compromised."</p> <p>The move highlights a major issue that many in the crypto community, particularly privacy advocates, see as a major issue with stablecoins</p> <p>Stablecoins, unlike traditional cryptocurrencies such as bitcoin, can be frozen in the same way that funds in a bank account can.</p> <p>It's one of the reasons proponents of decentralised finance advocate for the use of DeFi stablecoins like Maker's DAI, which are not controlled by a centralised authority that could freeze cryptocurrency.</p> <p>Tether is not the only stablecoin provider who does this.</p> <p>Grant Thornton, a top 10 global auditing firm, noted in its audit of USD Coin issuer Circle Internet Financial's cash reserves on Sept. 20 that it "has the ability to block individual USDC public blockchain addresses from sending and receiving USDC." This ability is known as 'blacklisting.'</p> <p>When an address is blacklisted, it is no longer able to receive USDC, and all USDC controlled by that address is frozen and cannot be transferred on-chain. Individual USDC tokens cannot be blacklisted."</p> <p>At the time of the audit, there were 100,000 blacklisted USDC tokens in circulation.</p> <p>Binance USD, the third most valuable stablecoin, is not freezable, according to Binance CEO Changpeng "CZ" Zhao in a tweet on August 10, 2021, following the $612 million Poly Network hack.</p> <p>"While we cannot freeze funds on blockchains, if those funds arrive on our Binance exchange, we w