Quote from: mk4 on August 31, 2020, 03:57:15 AM

Guess what, even stablecoins(besides DAI/SAI) on YOUR OWN non-custodial wallet can be frozen. It's that alarming.

Topic: [UPDATED] PSA: Most Stablecoins Can Be Frozen, Even in Your Own Wallets https://bitcointalk.org/index.php?topic=5204055

Quote from: pooya87 on August 31, 2020, 04:24:54 AM

it depends on how you define "being frozen" (since you mention exchanges).

when you deposit some coins (whether it is stablecoin or anything else including bitcoin) to an address provided to you by an exchange you do not own that address, you only own an account and the exchange owns the address while letting you access a number in their database representing how much you deposited.
obviously they can freeze your "account" if you deposit coins that they don't like. this affects everything from bitcoin to stablecoins, tokens, shitcoins,...

but when you send coins to an address that you and you alone control (created the private key locally and store it that way) then whether it could be frozen or not depends on whether the coin is centralized or not. for example nobody can ever freeze bitcoin coins. but when the coins are centralized, they are like accounts (exchange account or a bank account) and the centralized authority can easily freeze them or even move the coins.
all stablecoins that i have seen so far (that are in use and are stable) are centralized.

It seems most of you have not understood my question. I am well aware of the fact that StableCoins can be frozen. Whether an exchange can freeze my coins or not is not what I am asking. My question is from the perspective of an exchange. What an exchange would do, if their StableCoin cold wallet is frozen by that StableCoin issuing authority, if the user, whose fund is in question, did not do KYC and withdrew his fund out through other coins, say Bitcoin?

To elaborate the scenario, let's say User U has deposited S StableCoin in Exchange E without KYC. U then converts S to Bitcoin B and withdraws from E. E moves deposited S to its cold storage with more S. Now, issuing authority of S gets a court order that U deposited stolen fund to E, which is now sitting in E's cold storage of S. So, issuing authority freezes the cold storage. Not only the stolen fund is frozen, but also the whole cold storage worth over million dollar is now locked. In this scenario, what would E do?