Will the cryptocurrency USDT be frozen?

Tether froze two addresses holding 5,239,155 USDT and 8,995,000 USDT on suspicion of crime. You may ask: Aren't cryptocurrencies decentralized? How can they be frozen remotely? Believe it or not, not all cryptocurrencies are decentralized like Bitcoin. Many newcomers may think that USDT is a decentralized cryptocurrency like Bitcoin, but it is not. USDT has always been a centralized cryptocurrency.

The name of the American commercial company that issued USDT is Tether, and its Chinese name is Tether. USDT, also known as Tether, is a token TetherUSD (USDT) based on the stable value currency USD (USD). 1USDT = 1 USD. Users can use USDT to exchange USD at a 1:1 ratio at any time.

The issuance of Tether is not based on any mining mechanism or decentralization, but simply on the verbal promise of a commercial company.

On the one hand, the company's asset reserves are not transparent. When Tether was issued, it claimed that they strictly abided by the 1:1 reserve, but no one knows whether the money was released? How much was released? Where was it placed? There has been constant controversy over the above ten years since it was issued.

Another reason is that as an issuer, you can remotely freeze the USDT in your wallet. As an American company, Tether will restrict the relevant addresses whenever law enforcement agencies require it to fulfill its anti-money laundering compliance obligations and believe that the funds are suspected of fraud, money laundering, terrorist financing and other activities. This is freezing the account. The principle of freezing is that USDT, as a product of smart contract programming, can constrain the management rights of the token through code. Whether your USDT is in a centralized exchange or a decentralized wallet, Tether can be remotely controlled. There are two conventional operating methods:

The first is marking (commonly known as poison mark). Tether technically marks the USDT involved in the case, telling the entire network that this thing is not clean. Whenever the poisoned USDT flows into any mainstream centralized exchange, it will trigger the exchange's risk control mechanism, causing the corresponding digital asset account to be frozen. Sometimes, it is not only the poisoned USDT that is frozen, but even other digital assets under the account will be frozen.

The second is that Tether freezes USDT directly. After USDT is frozen, it will lose its circulation ability and be stuck in a wallet. The original address owner will no longer be able to transfer the USDT tokens in his wallet address. As of March 2023, Tether has blacklisted 846 addresses in the Ethereum network, and more than 449 million USDT have been frozen. The number of USDT addresses on various chains frozen by law enforcement agencies in various countries is also gradually increasing. Therefore, friends who truly recognize the value of cryptocurrency and friends who really want to control their own digital currency assets can use things like USDT Tether as an intermediary.