Tether (USDT), the largest stablecoin in the crypto industry by market cap, blacklisted three Ethereum addresses. The addresses are holding approximately $150 million in USDT. The company behind the cryptocurrency has yet to issue any explanation for making this move, but in the past, similar actions were taken when the firm was aiding law enforcement and exchanges against hackers.
Tether’s address blacklisting continues in 2022
Tether is a centralized company, meaning that it has the ability to freeze addresses containing its tokens if it finds reasons for doing so. Previous instances where the company made such moves involved fighting crime, including freezing the addresses of individuals believed to be involved in hacking attacks, money laundering, or other shady activities.
The first instance when Tether froze an address was on the 28th of November, 2017. Since then, it blacklisted 563 addresses in total, 312 of which were added to its black list in 2021 alone. These three addresses represent the first intervention that the company has made in 2022.
As a centralized firm, Tether can choose to freeze any address for any reason, even if it is only a “precautionary reason.” This may include addresses believed to be associated with scams, which Eric Wall, the CIO of Arcane Asset, pointed out as a reason for one blacklisting in 2020.
That same year, the company froze around $35 million in USDT in a separate blacklisting to prevent cybercriminals from cashing out the coins that they stole.
Tether’s blacklisting is helpful, but also concerning
Despite the fact that Tether mostly intervenes to help aw enforcement, the crypto industry remains concerned about the lack of decentralization. With the growing concerns on one side, and the fact that there are many alternatives to USDT in the space, the adoption of other stablecoins has been growing rapidly.
One of the most popular alternatives to Tether as of late has been TerraUSD (UST), a stablecoin based on the Terra blockchain. TerraUSD is currently the fourth-largest stablecoin in the market, with a market cap of $10.6 billion as of January 14th, 2022. It ranks as the 20th-largest cryptocurrency, and the only stablecoins ranking above it are Tether (USDT), USD Coin (USDC), and Binance USD (BUSD), ranked in terms of market cap.
Tether’s market cap is the largest of the four stablecoins, currently containing $78.4 billion. While its market cap pales in comparison, TerraUSD is a decentralized coin, and its creator and founder of Terra, Do Kwon, noted that UST addresses cannot be frozen. Do Kwon specifically made this remark in response to Tether’s blacklisting.