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I’m not very knowledgeable on this topic, so I have a legit question about all of this: How is pausing withdrawals not blatant currency manipulation? If I had

I’m not very knowledgeable on this topic, so I have a legit question about all of this: How is pausing withdrawals not blatant currency manipulation? If I had USDC and lost all faith in it yesterday, shouldn’t I be allowed to cash out today? Also, if they’ve got many billions in cash, why would losing access to a sliver of it justify shutting down withdrawals? “Trust us, it’s worth a dollar! Or don’t trust us! It doesn’t matter because you don’t have any choice but to hold USDC until we deem it advantageous to us to allow you to exchange them for real money!”

capableweb 4y ago
Imagine that you use a currency made by a specific company, lets say it's called PaypalCoin. Part of the value of the currency is that the company manages it, part of the risk is that a company manages it. So you'll only be able to exchange it for X as long as Paypal say you can exchange it for X. This is part of what PaypalCoin is, so if you use it, you should be aware of this. This is basically what USDC is, and Circle is the organization that controls it. It is not a decentralized currency, it's a centralized digital currency. If Circle blacklists you and your funds, you won't be able to trade it for USD in the traditional exchanges, you'd only be able to do it P2P. This has happened already, with Tornado Cash, so it has precedent, not something I'm making up. > USDC is issued and redeemed in accordance with Centre policies including the Centre Blacklisting Policy. Centre reserves the right to block the transfer of USDC to and from an address on chain as permitted under the Centre Blacklisting Policy. https://www.circle.com/en/legal/usdc-terms https://www.circle.com/en/legal/usdc-terms & https://www.centre.io/hubfs/PDF/Centre_Blacklisting_Policy_20200512.pdf https://www.centre.io/hubfs/PDF/Centre_Blacklisting_Policy_2... If Circle says you cannot exchange your USDC for USD, then that's the rule. If you don't want that possibility, you wouldn't use USDC in the first place.
- easrng 4y ago
  If Circle blacklists you and your funds you can't do anything with them at all afaik.
  - capableweb 4y ago
    That's not true. They still live on a blockchain not controlled by them, so you can still send them around from account to account. You won't be able to get USD from them though via a CEX.
    - charcircuit 4y ago
      The smart contract on the blockchain allows them to blacklist addresses upon request from law enforcement.
    - easrng 4y ago
      The contract has a blacklist built in, see for yourself: https://etherscan.io/address/0xa2327a938febf5fec13bacfb16ae10ecbc4cbdcf#code https://etherscan.io/address/0xa2327a938febf5fec13bacfb16ae1... (and you can see the logs of them blacklisting and unblacklisting addresses here: https://etherscan.io/txs?a=0x5db0115f3b72d19cea34dd697cf412ff86dc7e1b https://etherscan.io/txs?a=0x5db0115f3b72d19cea34dd697cf412f...) It inherits from Blacklistable which allows a blacklister to blacklist accounts, and almost all functions on the contract have the notBlacklisted modifier which prevents them from being called by blacklisted accounts. /** * @title Blacklistable Token * @dev Allows accounts to be blacklisted by a "blacklister" role */ contract Blacklistable is Ownable { address public blacklister; mapping(address => bool) internal blacklisted; event Blacklisted(address indexed _account); event UnBlacklisted(address indexed _account); event BlacklisterChanged(address indexed newBlacklister); /** * @dev Throws if called by any account other than the blacklister */ modifier onlyBlacklister() { require( msg.sender == blacklister, "Blacklistable: caller is not the blacklister" ); _; } /** * @dev Throws if argument account is blacklisted * @param _account The address to check */ modifier notBlacklisted(address _account) { require( !blacklisted[_account], "Blacklistable: account is blacklisted" ); _; } /** * @dev Checks if account is blacklisted * @param _account The address to check */ function isBlacklisted(address _account) external view returns (bool) { return blacklisted[_account]; } /** * @dev Adds account to blacklist * @param _account The address to blacklist */ function blacklist(address _account) external onlyBlacklister { blacklisted[_account] = true; emit Blacklisted(_account); } /** * @dev Removes account from blacklist * @param _account The address to remove from the blacklist */ function unBlacklist(address _account) external onlyBlacklister { blacklisted[_account] = false; emit UnBlacklisted(_account); } function updateBlacklister(address _newBlacklister) external onlyOwner { require( _newBlacklister != address(0), "Blacklistable: new blacklister is the zero address" ); blacklister = _newBlacklister; emit BlacklisterChanged(blacklister); } }
nevi-me 4y ago
One could ask whether halting trading of a stock is manipulation or not. Some risks arise mostly out of urgency, and not having countermeasures could have catastrophic results which otherwise would have been avoided by pausing the process. If Circle were operating as a fractional reserve bank where it borrowed from you by virtue of a positive bank balance, lent me 80% of that, and only kept 20%; pausing honouring withdrawals would likely be illegal. My view of this is that it's unrealistic to expect a company to store 100% of its assets in immediately avaialable deposits whereas international regulations that apply to banks require ~30 days of liquid supply. In this case, the legal contract between Circle and its depositors (holders of USDC) is that it'll exchange 1:1. intrinsically, Circle seems to demonstrate that this contract isn't yet broken, but they can't continue to honour that agreement over a weekend when there's uncertainty of which avenue those funds will come from. The selling pressure is purely from the secondary market where you're selling me USDC and I'm giving you 0.95 USD. > Also, if they’ve got many billions in cash, why would losing access to a sliver of it justify shutting down withdrawals? Because those billions are in T-bills that have to first be sold. And the "cash on hand" is ultimately with banks that are holding a fraction of it. > “Trust us, it’s worth a dollar! Or don’t trust us! It doesn’t matter because you don’t have any choice but to hold USDC until we deem it advantageous to us to allow you to exchange them for real money!” Well, "we're enabling redemption on Monday" doesn't equate to the above. If my pastry shop runs out of already baked goods during the AM peak, I can only ask my customers to wait for me to finish baking more. If there was a pastry regulation, its review would say that I should start baking more pastries in future.
- braingenious 4y ago
  >If my pastry shop runs out of already baked goods during the AM peak If your pastry shop had 40 billion donuts, and you claim that 10 billion of those donuts are available for sale immediately, do you close your shop when you lose 3.3 billion of them, leaving you with only 6.7 billion donuts that are still sitting there?
  - nightmarish 4y ago
    Yea because it’s way better for the customers to believe the illusion that I have 40 billion than to find out I only had let’s say… 5
323 4y ago
They didn't pause anything. The US banks did, by not working in the weekend (for large sums). If you had 1 billion USD with your favorite US bank, that would be paused too right now.
- braingenious 4y ago
  I’m hearing that you can’t even use USDC to exchange for bitcoin/ETH on Coinbase right now. What does converting between types of crypto have to do with banks? Those transactions should in theory have nothing to do with a banking transaction. It seems like they’re simply forcing people to hold USDC, full stop, and are blaming banks for their decision to do so.
  - capableweb 4y ago
    USDC is supposedly backed by USD. If Cirle/Centre doesn't have access to enough USD, they cannot maintain the peg of USDC.
    - braingenious 4y ago
      What does that have to do with exchanging for crypto? If I move USDC from one wallet to another, and someone else moves bitcoin from one wallet to another in exchange for that USDC, that transaction happens entirely on the blockchain and at no point involves a bank or a peg. The only reason to disable that function is to force people to hold USDC.
  - 323 4y ago
    > I’m hearing that you can’t even use USDC to exchange for bitcoin/ETH on Coinbase right now. That would be the fault of Coinbase, not Circle or USDC. On other exchanges, like Bitstamp, you can freely buy/sell your USDC to crypto/fiat.
  - everfree 4y ago
    For better or worse, Coinbase does not have a USDC/USD trading pair, or USDC trading pairs with most cryptos (BTC, ETH, etc.). For the most part they have USD trading pairs, which if you have USDC you're typically expected to access by redeeming your USDC for USD and then using the USD trading pairs. But since USDC to USD redemption is halted for now, you effectively cannot trade USDC for most common cryptocurrencies on Coinbase without going through one of their (afaik) three live USDC trading pairs - USDC/EUR, USDC/GBP, and USDT/USDC. However, other exchanges actually do have USDC markets for most other cryptocurrencies. If you deposit your USDC with them, then you can directly trade order books on USDC/USD, BTC/USDC, and ETH/USDC, which function regardless of the lack of redemption and regardless of the actual market price of USDC. If Coinbase had lots of USDC trading pairs like other exchanges do, it would avoid the issue you outlined in your comment, but it would also fragment liquidity across two markets that are effectively identical during business-as-usual periods where redemptions function properly.
nikanj 4y ago
Because crypto is not currency. It’s more like the fake money at Habbo Hotel
- samstr 4y ago
  [dead]
- braingenious 4y ago
  The path is gray.
renewiltord 4y ago
Beats me, but JP Morgan Chase has paused withdrawals for me too. They say "You have reached your daily $5000 ATM withdrawal limit" and "Bank hours are 9 AM to 5 PM Monday through Friday". "Trust us, you can withdraw your money! Or don't trust us! It doesn't matter because you have no choice but to look at your bank balance until we deem it advantageous to allow you to withdraw to real money!"
simple-thoughts 4y ago
This is exactly why I never hold USDC. Many stablecoins are well managed. USDC has a history of slimey behavior that has always made them appear much riskier to me than alternatives. For instance I don’t trust USDT management either, but I would trust them more than USDC management.

capableweb 4y ago

Imagine that you use a currency made by a specific company, lets say it's called PaypalCoin. Part of the value of the currency is that the company manages it, part of the risk is that a company manages it. So you'll only be able to exchange it for X as long as Paypal say you can exchange it for X. This is part of what PaypalCoin is, so if you use it, you should be aware of this. This is basically what USDC is, and Circle is the organization that controls it. It is not a decentralized currency, it's a centralized digital currency. If Circle blacklists you and your funds, you won't be able to trade it for USD in the traditional exchanges, you'd only be able to do it P2P. This has happened already, with Tornado Cash, so it has precedent, not something I'm making up. > USDC is issued and redeemed in accordance with Centre policies including the Centre Blacklisting Policy. Centre reserves the right to block the transfer of USDC to and from an address on chain as permitted under the Centre Blacklisting Policy. https://www.circle.com/en/legal/usdc-terms https://www.circle.com/en/legal/usdc-terms & https://www.centre.io/hubfs/PDF/Centre_Blacklisting_Policy_20200512.pdf https://www.centre.io/hubfs/PDF/Centre_Blacklisting_Policy_2... If Circle says you cannot exchange your USDC for USD, then that's the rule. If you don't want that possibility, you wouldn't use USDC in the first place.

easrng 4y ago
If Circle blacklists you and your funds you can't do anything with them at all afaik.
- capableweb 4y ago
  That's not true. They still live on a blockchain not controlled by them, so you can still send them around from account to account. You won't be able to get USD from them though via a CEX.
  - charcircuit 4y ago
    The smart contract on the blockchain allows them to blacklist addresses upon request from law enforcement.
  - easrng 4y ago
    The contract has a blacklist built in, see for yourself: https://etherscan.io/address/0xa2327a938febf5fec13bacfb16ae10ecbc4cbdcf#code https://etherscan.io/address/0xa2327a938febf5fec13bacfb16ae1... (and you can see the logs of them blacklisting and unblacklisting addresses here: https://etherscan.io/txs?a=0x5db0115f3b72d19cea34dd697cf412ff86dc7e1b https://etherscan.io/txs?a=0x5db0115f3b72d19cea34dd697cf412f...) It inherits from Blacklistable which allows a blacklister to blacklist accounts, and almost all functions on the contract have the notBlacklisted modifier which prevents them from being called by blacklisted accounts. /** * @title Blacklistable Token * @dev Allows accounts to be blacklisted by a "blacklister" role */ contract Blacklistable is Ownable { address public blacklister; mapping(address => bool) internal blacklisted; event Blacklisted(address indexed _account); event UnBlacklisted(address indexed _account); event BlacklisterChanged(address indexed newBlacklister); /** * @dev Throws if called by any account other than the blacklister */ modifier onlyBlacklister() { require( msg.sender == blacklister, "Blacklistable: caller is not the blacklister" ); _; } /** * @dev Throws if argument account is blacklisted * @param _account The address to check */ modifier notBlacklisted(address _account) { require( !blacklisted[_account], "Blacklistable: account is blacklisted" ); _; } /** * @dev Checks if account is blacklisted * @param _account The address to check */ function isBlacklisted(address _account) external view returns (bool) { return blacklisted[_account]; } /** * @dev Adds account to blacklist * @param _account The address to blacklist */ function blacklist(address _account) external onlyBlacklister { blacklisted[_account] = true; emit Blacklisted(_account); } /** * @dev Removes account from blacklist * @param _account The address to remove from the blacklist */ function unBlacklist(address _account) external onlyBlacklister { blacklisted[_account] = false; emit UnBlacklisted(_account); } function updateBlacklister(address _newBlacklister) external onlyOwner { require( _newBlacklister != address(0), "Blacklistable: new blacklister is the zero address" ); blacklister = _newBlacklister; emit BlacklisterChanged(blacklister); } }

nevi-me 4y ago

One could ask whether halting trading of a stock is manipulation or not. Some risks arise mostly out of urgency, and not having countermeasures could have catastrophic results which otherwise would have been avoided by pausing the process. If Circle were operating as a fractional reserve bank where it borrowed from you by virtue of a positive bank balance, lent me 80% of that, and only kept 20%; pausing honouring withdrawals would likely be illegal. My view of this is that it's unrealistic to expect a company to store 100% of its assets in immediately avaialable deposits whereas international regulations that apply to banks require ~30 days of liquid supply. In this case, the legal contract between Circle and its depositors (holders of USDC) is that it'll exchange 1:1. intrinsically, Circle seems to demonstrate that this contract isn't yet broken, but they can't continue to honour that agreement over a weekend when there's uncertainty of which avenue those funds will come from. The selling pressure is purely from the secondary market where you're selling me USDC and I'm giving you 0.95 USD. > Also, if they’ve got many billions in cash, why would losing access to a sliver of it justify shutting down withdrawals? Because those billions are in T-bills that have to first be sold. And the "cash on hand" is ultimately with banks that are holding a fraction of it. > “Trust us, it’s worth a dollar! Or don’t trust us! It doesn’t matter because you don’t have any choice but to hold USDC until we deem it advantageous to us to allow you to exchange them for real money!” Well, "we're enabling redemption on Monday" doesn't equate to the above. If my pastry shop runs out of already baked goods during the AM peak, I can only ask my customers to wait for me to finish baking more. If there was a pastry regulation, its review would say that I should start baking more pastries in future.

braingenious 4y ago
>If my pastry shop runs out of already baked goods during the AM peak If your pastry shop had 40 billion donuts, and you claim that 10 billion of those donuts are available for sale immediately, do you close your shop when you lose 3.3 billion of them, leaving you with only 6.7 billion donuts that are still sitting there?
- nightmarish 4y ago
  Yea because it’s way better for the customers to believe the illusion that I have 40 billion than to find out I only had let’s say… 5

323 4y ago

They didn't pause anything. The US banks did, by not working in the weekend (for large sums). If you had 1 billion USD with your favorite US bank, that would be paused too right now.

braingenious 4y ago
I’m hearing that you can’t even use USDC to exchange for bitcoin/ETH on Coinbase right now. What does converting between types of crypto have to do with banks? Those transactions should in theory have nothing to do with a banking transaction. It seems like they’re simply forcing people to hold USDC, full stop, and are blaming banks for their decision to do so.
- capableweb 4y ago
  USDC is supposedly backed by USD. If Cirle/Centre doesn't have access to enough USD, they cannot maintain the peg of USDC.
  - braingenious 4y ago
    What does that have to do with exchanging for crypto? If I move USDC from one wallet to another, and someone else moves bitcoin from one wallet to another in exchange for that USDC, that transaction happens entirely on the blockchain and at no point involves a bank or a peg. The only reason to disable that function is to force people to hold USDC.
- 323 4y ago
  > I’m hearing that you can’t even use USDC to exchange for bitcoin/ETH on Coinbase right now. That would be the fault of Coinbase, not Circle or USDC. On other exchanges, like Bitstamp, you can freely buy/sell your USDC to crypto/fiat.
- everfree 4y ago
  For better or worse, Coinbase does not have a USDC/USD trading pair, or USDC trading pairs with most cryptos (BTC, ETH, etc.). For the most part they have USD trading pairs, which if you have USDC you're typically expected to access by redeeming your USDC for USD and then using the USD trading pairs. But since USDC to USD redemption is halted for now, you effectively cannot trade USDC for most common cryptocurrencies on Coinbase without going through one of their (afaik) three live USDC trading pairs - USDC/EUR, USDC/GBP, and USDT/USDC. However, other exchanges actually do have USDC markets for most other cryptocurrencies. If you deposit your USDC with them, then you can directly trade order books on USDC/USD, BTC/USDC, and ETH/USDC, which function regardless of the lack of redemption and regardless of the actual market price of USDC. If Coinbase had lots of USDC trading pairs like other exchanges do, it would avoid the issue you outlined in your comment, but it would also fragment liquidity across two markets that are effectively identical during business-as-usual periods where redemptions function properly.

nikanj 4y ago

Because crypto is not currency. It’s more like the fake money at Habbo Hotel

samstr 4y ago
[dead]
braingenious 4y ago
The path is gray.

renewiltord 4y ago

Beats me, but JP Morgan Chase has paused withdrawals for me too. They say "You have reached your daily $5000 ATM withdrawal limit" and "Bank hours are 9 AM to 5 PM Monday through Friday". "Trust us, you can withdraw your money! Or don't trust us! It doesn't matter because you have no choice but to look at your bank balance until we deem it advantageous to allow you to withdraw to real money!"

simple-thoughts 4y ago

This is exactly why I never hold USDC. Many stablecoins are well managed. USDC has a history of slimey behavior that has always made them appear much riskier to me than alternatives. For instance I don’t trust USDT management either, but I would trust them more than USDC management.