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Are there any concerns, in general, around the ability to ‘freeze’ or ‘blacklist’ currencies as has been seen in a few recent cases.

Hi,

I have been reading some of the general news articles (e.g. https://www.forbes.com/sites/jonathanponciano/2021/08/12/hacker-finally-returns-nearly-all-600-million-stolen-in-ethereum-other-tokens-after-major-crypto-heist/?sh=5c92dfea19cb) which talk about ‘freezing’ or ‘blacklisting’ of stolen currency. Something I had thought was technically possible, but practically impossible in terms of implementation.

I have no particular concerns over the current circumstances where currency was clearly stolen, the whole mechanism seem very arbitrary and, potentially, subject to abuse. As far as I can tell the freezing and blacklisting activities have been instituted by individual organisations. Again, I have not issue with the concept of this happen in cases of theft, however it isn’t too hard to imagine situations where this could get used is far less clear cut cases.

An obvious one; the label of ‘radical’ or ‘terriorist’ gets applied to very different people across countries, and could be used to justify the freezing/blacklisting of identified assets. There is a long history of nations leaning on companies to take action against individuals, so I don’t seem something like this a impossible by any means. I realise this is a very unlikely occurrence for the vast majority of people, but not an impossible one.

While freezing/taking of assets is very possible with (basically) any currency, there are normally very strict requirements and venues to challenge it. More so, ‘cash’ money is virtually unfreezeable. Serial numbers on notes etc might get recorded but are practically impossible to block or even link to an individual to attempt blocking. The digital nature of crypto seems to make it trackable (and therefore potentially blockable) down to the finest level.

I understand that the relative lack of regulation has allowed for amazing developments in the crypto space, however are there any built in protections or mechanisms to deal with this type of potential abuse?

I am more than open about my ignorance of the finer (or even not so fine) details of crypto, so please don’t fry me if I have misunderstood something basic, or this is the wrong place to ask.

As such this is a genuine question for which I haven’t seen a good answer, please forgive any rookie mistakes around the situation.

What do you think?

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