Coinbase’s New Stablecoin (USDC) Could Freeze Funds and Censor Accounts

As previously reported by CryptoGlobe, Coinbase and Circle have recently created USD Coin (USDC). This token, an Ethereum ERC-20 cryptocurrency, is a product of Coinbase’s joint venture with Circle, titled the “CENTRE Consortium.” This partnership aims to “[establish] a standard for fiat on the internet and [provide] a governance framework and network for the global, mainstream adoption of fiat stablecoins.”

The newly launched stablecoin, USDC, will allow users to move U.S. Dollars as easily as they can move cryptocurrencies. This means traders can easily transfer liquidity between exchanges, and thanks to support from the Coinbase Wallet, they can now store it themselves and transfer it to other people as well. Since USDC is an ERC-20 token, it can also be stored on Ethereum wallets, such as the Ledger Nano S.

Even though this newly launched project could allow more people to use cryptocurrencies, it could also prevent some from using it. In their user agreement, Circle explains that they have near complete control over user accounts. They can freeze funds, terminate accounts, and even report accounts to the authorities. Circle’s user agreement outlines their blacklisting policy:

Circle reserves the right to “blacklist” certain USDC addresses and freeze associated USDC (temporarily or permanently) that it determines, in its sole discretion, are associated with illegal activity or activity that otherwise violates the terms of this User Agreement (“Blacklisted Addresses”). In the event that you send USDC to a Blacklisted Address, or receive USDC from a Blacklisted Address, Circle may freeze such USDC and take steps to terminate your USDC Account. In certain circumstances, Circle may deem it necessary to report such suspected illegal activity to applicable law enforcement agencies and you may forfeit any rights associated with your USDC, including the ability to redeem USDC for U.S. Dollars. Circle may also be forced to freeze USDC and/or surrender associated U.S. Dollars held in Segregated Accounts in the event it receives a legal order from a valid government authority requiring it to do so.

Despite these possible issues, Coinbase seems extremely positive on stablecoins. Chief technology officer (CTO) Balaji Srinivasan was recently quoted comparing stablecoins to the iPhone:

[they] could be to the financial system what the iPhone was to mobile, namely an innovation that makes the entire system more programmable, and hence more useful.

The launch of this new stablecoin shows the growth of legacy interest in the cryptocurrency space. Circle, the creator of USDC, has recieved $140 million in venture capital funding with lead investmnet from Goldman Sachs. Circle also owns the cryptocurrency exchange Poloniex.

JPMorgan Chase Accused of Fixing Metal Prices Despite Talk of Bitcoin Market Manipulation

  • Wall Street giant JPMorgan Chase's metals desk has been accused of 'thousands' of trades related to price-fixing.
  • US prosecutors have invoked RICO laws against the bank which are reserved for organized crime rings. 

While the U.S. Securities & Exchange Commission (SEC) and other regulatory bodies have been critical of bitcoin over market manipulation, new reports reveal that JPMorgan Chase is facing allegations of fixing prices for precious metals. 

JPMorgan Chase Price-Fixing

According to a report by Bloomberg on Sept. 16, U.S. prosecutors have invoked the racketeering law (RICO) against JPMorgan Chase’s metals desk, which is being described as a criminal enterprise. For nearly a decade, employees of the trading desk have allegedly engaged in thousands of illegal moves to price-fix precious metals and defraud market investors. 

Assistant Attorney General Brian Benczkowski told journalists, 

Based on the fact that it was conduct that was widespread on the desk, it was engaged in in thousands of episodes over an eight-year period -- that it is precisely the kind of conduct that the RICO statute is meant to punish.

RICO is typically reserved for only the most severe, organized crime rings, with former prosecutors calling it a bold move by the Justice Department against the bank. Prosecutors claim that more than a dozen employees participated in the scheme, with two having already pleaded guilty and cooperating with authorities. 

Crypto supporters have been quick to point out the irony in JPMorgan’s situation. Jamie Dimon, CEO of the Wall Street bank, has been one of the most vocal detractors of bitcoin over the years, famously calling the crypto-asset a “fraud” in Sept. 2017.

 

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