39 Ethereum addresses Banned from using USDT

A total of $5.5m USDT appears to be frozen from stablecoin issuer Tether

By · Jul 9, 2020 . 8min read

A Twitter user just published 39 Ethereum addresses banned from using USDT. This revelation is coming just hours after Circle, the issuer of USDC stablecoin announced it had banned an address with $100,000 locked inside.

This has attracted the interest of the crypto community on Twitter many who have decided to investigate further.

The Twitter user with the handle @PhABCD went further by creating a dashboard on Dune Analytics detailing these addresses and also to further track activities on the banned Ethereum addresses.

The operator of one of the addresses had transferred $938,965.95 from Binance barely 25 days ago before the ban. 

Apparently, the ban has been happening as far back as 2017. As the Twitter user Dune Analytics dashboard shows, one of the ethereum address was banned on the 28th of November 2017 after interacting with Bitfinex multi-sig wallet. 

Of the 39 addresses, 4 of the 22 that had active USDT balances when they were frozen. Tether appears to have frozen a total of $5.5m in 2020 alone. This account has over $4.5 million USDT and $330,862 BUSD trapped inside.

The Hack and the Ban

Interestingly, when you pitch Tether against its history, some patterns emerge. Series of events that had happened before the date the first address was banned shows the ban started after the 2017 hack. Tether wrote on its website (the post which has since been deleted)  it had been hacked. It claimed the malicious hacker carted away with $30.95 million. 

Interestingly, 39 of these addresses had at one point or the other interacted with Bitfinex Exchange multi-signature wallet. Could this then be punitive measures Bitfinex/Tether has taken to punish the hackers?

Bitfinex and Tether USDT

One would then ask: what relationship does Bitfinex have with Tether? The same people run both Tether and Bitfinex as the New York Times reported in 2017. The New York Attorney General’s office accused Bitfinex which is the parent company of Tether to have illegally used funds (collateral) from Tether to cover up to $850 million in (alleged) losses. Bitfinex, of course, refuted this claims and was embroiled in a series of lawsuits filed against it by NYAG.

Some in the crypto community rumoured that the manipulation in the crypto market especially Bitcoin trading is linked to Tether. Tether which was founded in 2014 dominates the stablecoin market even till date. In fact, research site CryptoCompare published that about 80% of all bitcoin trading is done in USDT by 2019.

Ethereum co-founder, Joseph Lubin, however, disagreed with Tether/Bitcoin manipulation sentiment while speaking on Yahoo Finance’s Closing Spherical which held in August 2018.

Theories Flying Everywhere on Twitter

As expected, Twitter which is undeniably the preferred social media platform for crypto and bitcoin enthusiasts is buzzing. Different theories are flying around as the crypto community tries to make sense of this.

Since crypto prides itself of being censorship-resistant from government, it appears censorship still exists deep within the cryptocurrency. Tether, controls the issuance of USDT stablecoin backed the US dollar.

Another user pointed out that DAI and sUSD is the only stablecoin that is censorship-resistant.

How would this impact the Tether market which has continued to gain huge volume and has even overtaken Ripple? Tether is minted across five public chains namely; Ethereum, EOS, TRON Omni (Bitcoin) and Liquid making it the biggest stablecoin market. Tether as at the time of this publication ranks third on coinmarketcap with over $9.2 billion market cap and $25 billion market volume.

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