Crypto pundit Star has highlighted that crypto decentralization is a myth, noting that crypto networks and firms can freeze funds. The pundit specifically alluded to the Tether freeze and Arbitrum’s move to freeze the crypto assets stolen by the Kelp DAO exploiter.
Pundit Highlights Crypto Decentralization Myth
In an X post, Star stated that centralization has been exposed inside TRON USDT. The pundit noted that Tether just executed the largest freeze in its history, freezing $344 million USDT, which it carried out in coordination with OFAC and the U.S. law enforcement. This was executed directly through the USDT smart contract, with the funds visible but completely unusable.
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Further commenting on how it works, Star explained that Tether has admin control over USDT contracts, which proves that crypto decentralization is a myth. The pundit added that this admin control enables the USDT issuer to blacklist any address, freeze balances instantly, and permanently destroy funds.
It is worth noting that Tether had confirmed the freeze, stating that it supported the U.S. government in freezing $344 million USDT across two addresses, which were on the TRON network. The firm added that the freeze was executed after the addresses were identified, preventing further movement of funds.
A CNN report confirmed that the U.S. government directed the freeze of these USDT funds because they are linked to Iran. Iran had notably opted against stablecoins in favor of Bitcoin for toll payments at the Strait of Hormuz over fears of seizure, further highlighting the myth around crypto decentralization.
Meanwhile, Star pointed out that the Tether freeze on TRON came just days after the network’s founder, Justin Sun, said that TRON is the most decentralized blockchain in the world after the Arbitrum incident. Sun has yet to comment on the Tether freeze on the TRON network, which occurred earlier this week.
The Arbitrum Incident Also Raises Concerns
Star also cited the Arbitrum incident to highlight that crypto decentralization is a myth. Earlier this week, Arbitrum announced that the network’s Security Council had taken emergency action to freeze the 30,766 ETH being held in the Arbitrum address that is connected to the Kelp DAO exploiter.
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The network stated that the Security Council acted with input from law enforcement regarding the exploiter’s identity. It is worth noting that the Kelp DAO exploiter had stolen up to $292 million in staked ETH from the Kelp DAO bridge last weekend. Meanwhile, Arbitrum’s decision to freeze this ETH drew mixed reactions.
Crypto pundit Pledditor noted that Arbitrum, which has regularly received praise from Vitalik Buterin as the most decentralized Layer-2, has just frozen funds. On the other hand, Helius CEO Mert praised the move, noting that Arbitrum having the means of control and refusing to use it to appease the exploiters would be a “much worse and dishonorable outcome.”
Featured image from Pxfuel, chart from Tradingview.com