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Stablecoins Are Not as Safe as You Think. How Your USDT, PAX, BUSD Get Frozen in a Moment

Stablecoins Are Not as Safe as You Think. How Your USDT, PAX, BUSD Get Frozen in a Moment
Being created on the basis of blockchain, stablecoins were considered to be a safe haven for investors… until recently. Why is their immunity elusive and how does the Financial Action Task Force (FATF) plan to control them?
Established in 1989 by the G7, the FATF inter-governmental organization develops policies to resist money laundering and financing of terrorism. It sets standards and implements legal and regulatory measures to combat illegal financial transactions.
They developed recommendations for the monitoring of money laundering and keep revising them regularly. In case of non-compliance, law enforcement is executed via regional financial organizations. As of 2019, there are 39 full members of FATF, including the USA, UK, Australia, most EU countries, Singapore, India and the Russian Federation.
Since 1st July, the FATF organization has been headed by Marcus Pleyer. During the last FATF meeting, the new president expressed his concerns about global stablecoins and organizations that issue them. Although the organization had already dealt with these cryptocurrencies, it highlighted that, “it is essential to continue closely monitoring the ML/TF risks of so-called stablecoins, including anonymous peer-to-peer transactions via unhosted wallets”.
Is it ever possible to control crypto wallets that are not hosted on online exchanges? – you’d ask. We’re used to the fact that cryptocurrencies are outside the reach of banks and governments. However, when it comes to stablecoins, things are different.

It’s in the code

What makes stablecoins special is that they are pegging to fiat currency, for example, 1 TUSD = $1 USD. This means that such assets should be backed up by real money stored in the bank accounts of the issuing organization. Consequently, stablecoin creators need to comply with the requirements of the SEC, FATF and other controlling agencies, if they are to operate in the cryptocurrency sphere and be authorised to sell stablecoins. Transparent reports are not the only requirement, stablecoins must also provide the possibility of account blocking.
Surprisingly, this feature is implemented in each stablecoin. The experts from QDAO DeFi are covering several stablecoin protocols that enable this function.

OMNI-based USDT

Issued by Tether Limited, USDT is a stablecoin that was originally created to be worth $1 with each token backed by a $1 real fiat reserve. The currency was successfully promoted and added to major cryptocurrency exchanges but stayed a controversial asset. Despite the claims of Tether Limited, they failed to provide any contractual right or other legal claims to guarantee that USDT can be swapped for dollars or be redeemed.
In April 2019, Tether’s lawyers explained that each USDT was backed by only $0.74 in cash or equivalent assets. No audit of dollar collateral was done. A month before that, it changed the backing to include loans to affiliate companies. The scandal also involved the Bitfinex exchange that was accused of using USDT funds to cover $850 million in funds lost since 2018. They were also accused of manipulating USDT to push the BTC price.
Tether is available on five blockchains: Omni, Ehereum, EOS, Tron and Liquid. Only the latter does not have a freezing feature. Omni was the first protocol for USDT. Blocking of users’ accounts is possible, thanks to the following piece of code:

https://preview.redd.it/uqho45l33om51.png?width=690&format=png&auto=webp&s=c0feebdae086b0deeccde05278eaf3cc760f9e2b
Apparently, it’s used to blacklist addresses and contracts.

PAX

The concerns about PAX were centered around the notorious MMM BSC Ponzi scheme. Before the widespread adoption of DeFi services, it was the second-largest gas consumer after Ethereum. Out of 25,000 daily transactions, 5,000 were performed by MMM BSC. It was reported to be a scam but none of the accounts were frozen. Does it mean PAX lacked the resources to regulate illicit activities?
Evidently, not. The protocol code has a LAW ENFORCEMENT FUNCTIONALITY function that allows for the freezing/unfreezing of contracts or burning assets on blacklisted accounts. It turns out, anyone risks having their PAX coins destroyed during an investigation process while their accounts stay blocked.

History of frozen accounts

In 2019, the ZCash Foundation and Eric Wall conducted research on the privacy of stablecoins and revealed several frozen addresses. It’s not clear why exactly they were blocked. Most probably, it happened shortly after the exchange withdrawal – users took this action after witnessing platforms being hacked.

https://preview.redd.it/pkbruqm83om51.png?width=838&format=png&auto=webp&s=b068c5b8c5e5439892eaf5feefa3fbc93c694c8c
USDT was implicated at least twice in scandals to do with freezing. In April 2019, about $850 million in Tether dollars sent by Crypto Capital Corp. were frozen by a New York court. Tether and Btfinex were accused of participating in a cover-up to hide about $850 million worth in clients’ funds. By July 2020, Tether had frozen 40 Ethereum addresses with millions of USDT (some of them are shown in the screenshot above).
The Centre Consortium was the next to follow their lead; about a month ago, it blacklisted an address with USDC worth $100,000. That was done in response to law enforcement.
Yet, it’s not only Europe and the USA imposing control over cryptocurrencies. Since June 2020, the Chinese government managed to block several thousands of users’ bank accounts. It was done to resist illicit activities, especially money laundering. On some of those accounts, no activity had been detected for several months. Meanwhile, prior to April 2020, Chinese residents moved over $50 billion worth of crypto outside the country borders – more than is officially allowed (a maximum of $50,000 per person).
The authorities claim that USDT and other stablecoins are often used in illegal activities. Together with the People’s Bank of China (PBOC), they are developing new ways of investigating digital crimes and money laundering operations involving exchanges and crypto wallets. Local financial bureaus and police are working tight-lipped about investigating startups and crypto exchanges. And they are succeeding at it.
In July 2020, Chinese authorities confiscated BTC, ETH and USDT worth $15 million from people who allegedly ran a fake cryptocurrency scheme.
By the way, not only corporate accounts are being closed. One investor claims his account had been frozen after using yuan to purchase crypto. Also, users who transfer illegally obtained money outside of the mainland in large amounts are under suspicion. Does it mean the Chinese government has started tightening the screws on cryptocurrency users?

DAI, USDT on Liquid and USDQ are the main options for stablecoin deposits

So, where can you store your crypto assets? USDT on Liquid and DAI are not the only solutions available. Consider making a deposit in USDQ, the stablecoin of the QDAO ecosystem. Like other stablecoins, it’s 1-to-1 pegged to USD. However, it cannot be frozen by a government, financial organization or anyone from the QDAO team. You can check it yourself by reading our Smart contract and USDQ Audit.
In QDAO, users’ accounts are never frozen by a single person – all account issues are solved by the entire QDAO community, with the help of a QDAO governance token.
In case of blocking (the chances of which are almost non-existent), you can address the QDAO community and get timely help.

Bottom Line

With FATF taking this new course of action, we might witness serious pressure on stablecoin providers. Some projects will resist it, but it’s still not safe to store your assets in popular stablecoins, especially USDT. Your account can be frozen by authorities for dozens of reasons without the possibility of retrieval.
Yet, there are a number of reliable alternatives and USDQ stablecoin is one of them. QDAO DeFi platform users feel free to manage their crypto reserves and make profitable deposits.
Want to be the first to hear QDAO DeFi news and updates? Visit our website and stay in touch with us on social media: Twitter, Facebook, Telegram and LINE (for the Japanese-speaking community).
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Taking a huge risk while young with no kids. If it fails, FIRE target through traditional work in 6-8 years. If it works, FIRE before 30. Anyone else with a similar story, like starting a business or something?

Hey ladies and gents, they say goals are best acomplished if you tell others, so here is my story, and my plan. This is going to be a wildly unpopular opinion, but rest assured I researched my decisions carefully, have the traditional FIRE plan in place should my gamble fail, and it will not impact any children. The FIRE plan is pretty general, so I'll spare you the details. Ill be saving my usual 60% of each paycheck, and I'll keep enjoying inexpensive hobbies, like mountain biking, hiking, and camping. The question is, how to invest the savings for the best return? The method I decided on will seem very controvertial, so let me be clear, I know it may not work. Actually, it likely will not work the way I plan out. But the possible benefits are an extra 10 years of life without waking up to an alarm clock.
Background
I am young, as in 25. I am a family medicine intern. My wife is 24, a resident optometrist. We both grew up almost poor. Like, "always had a roof, but in a cramped house; always got a few christmas presents, but had parents that could barely get to the next paycheck, and sometimes racked up credit card debt to do so" kind of poor. We also graduated from high school into the teeth of the Great Recession. Between that and our combined 15 years of college/professional school, we are experts at surviving off nothing and delaying purchases until we absolutely need them. We do not want kids, so we do not have to be as financially secure as a normal family. We are doing well now, with combined incomes of $5000 and $2000 per month for myself and my wife, respectively. This is more money flowing in than we have ever had. And we are so frugal, we usually only spend 30-40% of each paycheck.
*Plus, I was a vandweller for a while, so I know have a Plan C as well*
So, since we are so young, and yet toughened, we can take risks now and still have a decent length working life to make up for the likely failure of those risks. However, should the risk pay off, we could possibly FatFIRE within 1-2 years. I'd say the chance of that success is... maybe 1 in 3. It was good enough for Sean Connery and the Red October. And to have some time in our 20s back from the hellhole that is professional education... oh my god so worth the risk.
So, in the hopes that people will recognize we did not make this decision lightly, and we are simply trying to go out of the box, even the normal FIRE box, to attain freedom. Here is our story, and here is our plan.
Learning how to invest
Back in 2016, I had read some of the MMM blogs, and a few thousand dollars saved up. I was looking for anything that had decent returns, and a friend showed me how the Dow had tanked on news about China, and how he wished he had cash when the price was lower. At the time, I questioned the wisdom of buying when the market was going down. He looked at me, smiled, and told me it was just on sale.
So I got a Wealthfront account and put a few hundred in at 90% stocks. The market recovered within months and I had a pretty good return. I then took some funds out. I tried timing things using the "FeaGreed Index" and Warren Buffets "be greedy when others are fearful" advice. I wasn't a day trader, more of a week trader. Then the stock market went down a little, and I bought more. I was just super lucky, but I thought I had a good stomach for risk at that point.
Finding... (Dare I say it...) cryptocurrencies
Here I may lose some of you, if you hate the idea of cryptocurrencys, and I respect your opinion. They are almost all speculation at this point, so I don't blame you.
Anyway, I went looking for other, more volatile markets to apply Buffets advice after stocks flattened out in 2016. My sister's boyfriend told me he played with cryptocurrencies. So, I took some money off Wealthfront and I dabbled a bit on Gemini with Bitcoin ($600 at the time) and Ethereum ($12 at the time). I did my best to sell high, and buy in when FUD went around. I had put in maybe 1/2 of all my savings at that point. In total, my savings was only $15k then, but that was literally my life savings. Most was in Ethereum since it was cheaper. I started researching Bitcoin and Ethereum, and I liked Eth better.
Naturally, Ethereum took a 30% dump to $9, and I realized that "volatile" meant down as well as up. Feeling a little stung, I pulled most of my remaining funds from Ethereum to even out my stock gains to avoid capital gains tax headaches (since I had no idea how any of that worked back then either.)
Equally naturally, Ethereum then went off the rails to $40 before I could get my cash back in. The FOMO was strong, and I'm still kicking myself for missing that huge first leap. Luckily, it went from $40 to $400 in the span of a year. I had gone from $15k to $150k. I was in vapor lock for most of 2017 over this. I had never built up so much, so fast, and especially as it went higher in Autumn. At that point, I decided to pull from Ethereum and diversify in the cryptos, thinking the other shoe must be about to drop.
XRP and the New Years 2018 Ripple Pump
My sister's boyfriend again gave me some advice. He casually mentioned Ripple might be picked up by some big companies. My first thought was, "What the heck is a Ripple?" So I did some digging, and managed to get on the Kraken exchange, and glitched my way to a few hundred thousand XRP, while saving some of my precious Ethereum. Then XRP had that massive speculative pump, and I suddenly had over a 7-figure net worth within weeks. I was giddy. Then the market slumped. No big deal, I told myself. Then XRP took an 80% dump. *80. FREAKING. PERCENT.*
I lost over $800,000 on paper from the high. I consoled myself on still having a mid 6-figure net worth, even to this day, but that didn't help much. As to why I did not withdraw at the peak, it was because I was simply astonished, a bit greedy, and I had no idea how such massive capital gains would impact my taxes, since they would be short term gains. At the time, I remember deciding not to decide and just roll with it. I knew I was young enough to deal with the volatility. So Im still holding on, even as the cryptocurrency market stumbles along.
The Gamble
Thank you for reading along this far. Before going any further, allow me to clarify that I don't want to sound like a gambler who can make his losses back with "just one more good hand..." which this will certainly sound like. My calculated risk is this: We will pour every extra cent that we can into XRP until we are 30 or have $6-8 million, whichever comes first. We would never do any leverage trades, as buying on margin is as stupid as essentially burning money in such volatile markets. If XRP has not taken off by the time we are 30, we will re-evaluate it against other cryptos with use-cases or stocks. Meanwhile, we will remain as frugal as we have always been, and continue to save at least 60% of each paycheck. The idea is this: plenty of people discover the FIRE movement in their 30s, after having terrible financial habits and no savings. If those people can FIRE in a few years, we would be able to do so as well if the Crypto market collapses. Its been around since 2009, so I bet it will be around at least another decade.
The reasoning
There is a finance quote that goes something like, "diversification protects, concentration grows," and right now we need our funds to grow, quickly, to reach FIRE. I have researched Bitcoin, Bitcoin Cash, Ethereum, and XRP. I chose XRP because it serves a very useful purpose already. Ethereum does as well, but currently mostly in theory. I agree with MMM on Bitcoin, in that it is a "greater fool" game. Bitcoin is also the first. So was MySpace.
Anyway, XRP could easily become highly prized by banks for global money transfers, and in providing an actual service, behaves more as a "natural resource" than a security. And it is wise to buy natural resources before the demand grows for it. Imagine buying land in West Texas before the automobile was invented.
Also, while I hate to depend on speculation, rampant speculation made me a momentary-millionaire on paper over the course of weeks earlier this year. Even if having a good use-case isn't enough, I bet the speculators will return to the cryptosphere within the next year because it could be very useful. Call that my "Hail-Mary."
Discussion on Ripple and XRP, and why most people hate it. Skip if you don't want the technical talk
So there are currently a lot of risks. XRP could be ruled a security of the Ripple Company, and it would not be listed on certain exchanges. XRP could be abandoned by Ripple. XRP could grow more slowly than Ethereum, Bitcoin, Bitcoin Cash, or the myriad of other cryptocurrencies like EOS, Litecoin, or Cardano. Additionally, XRP uses a Ledger protocol, which is different from the Proof of Work "mining" required for Bitcoin or Ethereum. So it may technically not actually be a real cryptocurrency in the traditional sense. This makes it understandable why so many people do not like it, since they don't understand it compared to what they're used to. That doesn't mean it can't have value.
I have an answer to those concerns listed above. Ripple is doing its best to conform to SEC rules, and wants to be regulated as a currency. XRP likely won't be ruled a security, even though Ripple is selling the technology to utilize them. Currently XRP and its ledger system operate independently from Ripple, and can scale to demand, using tiny fees taken from each transaction. As far as growth, XRP does tend to lag, however, last time Bitcoin was $6k, XRP was $0.20. Now Bitcoin is $6k, and XRP is $0.45. I'll take 100% growth any day. And with some nudging from the Ripple Company, I think XRP is most likely to increase in value, and stay increased, where something else more popular may get pumped faster, then quickly dumped. That happened to XRP already, so I like to think it "got it out of it's system."
To digress a moment on the security/currency/natural resource thing, imagine XRP as a lump of iron. Now imagine you're in the bronze age. Ripple found and mined the iron, and had a lot of it. It was found to be valuable, so Ripple had to carefully manage how it interacts with the Iron supply. Now the lumps are being released by an escrow, so Ripple doesn't control such a large suppy any more. (Ripple is also decentralizing their control of the XRP ledger, with more 3rd party nodes coming online.) So, these lumps of iron are sitting there, and Ripple had an idea. Rather than use horses to carry sacks of gold, they could build a rail system out of the iron. Ripple would control the rail system. The iron could be made into mine carts. So, Ripple doesn't control the carts, just the rails, and so doesn't have to have the carts regulated as portions of the company. Kingdoms can easily transfer their gold to other kingdoms on the rails in the carts that they own. Buy the iron, and you can move value with it. That inherently gives value to the iron, since there is a finite supply. The cool thing is though, what else can iron be used for besides carts? I don't know, but someone like Jeff Bezos might.
Historical Comparison
Jeff Bezos came up with a book sales program. He focused it, got really good at it, and customers loved it. It became super popular, then it branched out and is involved in nearly everything. Anyone who invested in early Amazon is extremely wealthy.
Ripple the Company is getting really good at one thing, global payments. And they may be decentralizing, but Ripple can still nudge XRPs future. In the future, Ripple will certainly find other uses for their programs and for the global XRP supply. For example, imagine if it became the standard Xbox Live or PS4 Online token. Good golly miss molly, everyone and their grandmother would be trying to buy them.
So, with so many unknowns, XRP is unpopular now, and thus cheap. But IF it is ruled not a security, and IF it is used in global remittance markets, and IF the Ripple developers don't get stolen away by other blockchain teams, and IF another coin doesn't come out and do XRPs job better... then this might be a very dirty, balled up, golden ticket. We shall see. If you have questions, please comment, and I will try to better explain what I have found in my research.
Recap
So, being young and able to stomach some epic risks, (really, does the stock market count as risky if everyone intends to be able to have a 4% SWR after inflation?) I am going to put all my eggs in one basket. My life savings in XRP. At least til Im 30. If the gamble fails, I work 8 years as a frugal physician and FIRE before Im 40. If XRP (and a few Eth for good luck) go crazy, I may FIRE before 30. That extra 10 years is, like Tom Hanks says in Joe vs The Volcano, "gold in my hand."
Since there are a lot of ways to get to FIRE, please let me know if anyone else is trying the "eggs in one basket, concentrate wealth to grow" strategy. Or if you took a similarly huge risk that worked out, what is your story?
***I would love to answer any questions, but please also do your own research, and only invest what you can afford to lose. We have income, so we can afford to lose a good chunk of our life savings. We watched our parents survive that in 2009.
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MMM South Africa How to Provide Help with Bitcoin part 2 How to provide help in bitcoin on MMM MMM South Africa provide help with Bitcoin Tutorial : How to Make a Bitcoin (BTC) Address ? How to PROVIDE HELP on MMM Global BTC

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MMM South Africa How to Provide Help with Bitcoin part 2

This tutorial shows a step by step process of creating a bitcoin account and how you can use the bitcoin option to provide help in MMM Nigeria. This is the second and last part on how to provide help with Bitcoin in MMM South Africa. In this video you will see how I pay a member in MMM in bitcoin from my bitcoin wallet in blockchain. This is an illustrative video showing how to 1) get wallet I'd 2)add wallet I'd to accounts on PO 3) provide help in bitcoins(50%) Do like,subscribe and share. MMM pays. HOW TO CREATE A BITCOIN ACCOUNT AND PROVIDE HELP IN MMM WITH BITCOIN - Duration: 7:47. Afoks Ibeh 1,162 views. 7:47 . John Conway: Surreal Numbers - How playing games led to more numbers than ... Unsubscribe from MMM Happiness to finacial freedom? ... How To Use A Bitcoin Wallet - Bitpay - Duration: 8:04. BTC Sessions 133,444 views. 8:04. Why BitGo Wallets Are The Best - Duration: 1:01 ...

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