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"Blacklisting is one of the most controversial topics in crypto. Usually, this happens in response to criminal activity - everything from hacks, exploits, to money laundering and even terrorist financing.
Some say it’s a good thing, while others argue that freezing assets goes against the core ethos of crypto itself. After all, if a central authority can lock your funds, crypto isn’t much better than traditional banks - or even CBDCs.
But here’s the kicker: many projects have blacklisting enabled, even if they don’t advertise it publicly. So, when ByBit published a report that revealed which blockchains have blacklisting features, we knew we had to take a closer look."
~ Coin Bureau
This video summarizes a report by cryptocurrency exchange Bybit titled "Blockchain Freezing Exposed," which investigates the fund-freezing capabilities of various blockchains. Fund freezing, or blacklisting, occurs when a protocol locks a user's crypto assets without their consent, typically to prevent criminal activity. The report found that 16 out of 166 investigated blockchains currently have freezing capabilities, with another 19 having the potential to add them later. The three main blacklisting methods identified are hard-coded freezing (public blacklisting), used by chains like BNB Chain and Vechain, which integrates the blacklist directly into the code and requires a hard fork to change; config file-based freezing (private blacklisting), the most controversial and widely used method by blockchains like Sui and Aptos, where blacklists are managed by validators and developers in configuration files; and on-chain smart contract freezing, which was used by the now-defunct Heko chain, allowing administrators to instantly update the blacklist without a hard fork or validator restart.
The report highlights several notable cases where blacklisting was implemented, often in response to major hacks. For instance, the Sui Foundation activated its protocol-level freezing mechanism to freeze $162 million of the $223 million stolen from the Cedus DEX, and later recovered the funds after a governance vote. Following this, Aptos, which shares programming language roots with Sui, also implemented blacklisting features without an apparent governance vote. The BNB Chain also added fund-freezing capabilities and paused its entire blockchain after a $570 million cross-chain bridge exploit in 2022, hard-coding the hacker's address into a public blacklist. The video concludes by discussing the controversy around blacklisting, arguing it presents a trade-off between protecting investors and preserving the core crypto ethos of decentralization and censorship resistance, which is further threatened by stablecoin issuers freezing assets and increasing KYC requirements from regulators.
0:00 Intro
0:58 Freezing Methods
05:35 Sui and Aptos
07:35 BNB
09:14 Cosmos
11:08 Heco
12:55 VeChain
14:31 Other Censorship Resistance Challenges
Source - Coin Bureau YouTube: https://www.youtube.com/watch?v=JXg8FzE0ixU
Disclaimer: This video is provided for informational purposes only, and not offered or intended to be used as legal, tax, investment, financial, or any other advice.
