A digital wallet with a multi-million-dollar Tether (USDT) balance has been frozen, leaving some participants and enthusiasts in the cryptocurrency community debating the crypto sector's main theme: decentralization.
Whale Alert, which tracks the movement of digital wallets with the largest cryptocurrencies stashed, revealed late Wednesday that an address with a balance of 9,978,871 USDT worth around $9.9 million was just frozen.
❄ An address with a balance of 9,978,871 #USDT (9,986,854 USD) has just been frozen!https://t.co/zMhwVbdVBp
— Whale Alert (@whale_alert) April 10, 2024
The crypto community on X (formerly Twitter) was quick to react to the said development. One user said he hoped the wallet was owned by a scammer who finally got what they deserved. Another user noted the value of the tokens locked up and wondered "what led to the decision."
Many users, raised issues about "decentralization," a key theme in the cryptocurrency world wherein a system is controlled by a distributed network, not a central entity as is the case with traditional finance.
One user explained that Tether is "not a decentralized blockchain but runs on top of blockchains that some can be considered decentralized."
Tether is not a decentralized blockchain but runs on top of blockchains that some can be considered decentralized. Tether is a smart contract containing an option for the developer to freeze any amount of USDT in any wallet, custodial or not.
— Stanimir Uzunov (@stan1m1r) April 10, 2024
Another user called out the "misinformed comments" of some users who jumped into the comments section of the Whale Alert post. "Tether is a centralized stablecoin issuer and does freeze balances when law enforcements ask for it."
Such misinformed comments. Pathetic y'all. Do some research. Tether is a centralized stablecoin issuer and does freeze balances when law enforcements ask for it. This has nothing to do with decentralization or why why why, this happens all the time
— S3xyDutchm4n (💙,🧡) (@S3xy_Dutchm4n) April 10, 2024
Tether, unlike Bitcoin, is a centralized token. Theoretically, centralization helps the USDT remain more stable than BTC, considering that it is a dollar-pegged stablecoin, making it more resilient to market volatility.
The exact reason for the wallet's freezing is unclear as of writing, but Tether, which has been working hand-in-hand with law enforcement in the past year to freeze funds linked to criminal activities, has been freezing and blacklisting several wallets more frequently in recent months.
Earlier this month, Tether, the company behind the world's most popular stablecoin, blacklisted seven wallet addresses that received $280,000 in USDT from hackers who stole from crypto exchange FixedFloat. The said attack was the second targeting of FixedFloat by the same hackers that pilfered $26 million in Bitcoin (BTC) and Ether (ETH) from the exchange.
While Tether has been assisting in the law enforcement crackdown on illicit funds in the crypto market, it has also been under scrutiny for its token's use in Asian activities linked to human trafficking and terrorism.
The stablecoin giant is reportedly being investigated by the United States and United Kingdom over $20 billion in USDT that passed through Garantex, a sanctioned Russia-based crypto exchange.
