On Nov. 11, an Argentine court docket froze Libra tokens held by Hayden Davis—the central determine in a Libra scandal—and two suspected intermediaries, citing suspicions the property have been used to bribe public officers. The transfer follows Circle’s earlier freeze of USDC linked to the Libra workforce.
In recent times, crypto issuers have sometimes frozen tokens linked to flagged addresses—sometimes in response to alternate hacks or scams geared toward stopping unhealthy actors. But the truth that issuers can unilaterally lock holders’ funds runs counter to one in all crypto’s core ideas: “not your keys, not your cash.” The query now could be whether or not this energy represents a justified safeguard for public security—or a ticking time bomb beneath the reserves of people and establishments alike.
Abstract
- Hayden Davis, an individual behind the Libra token promoted by Argentine President Javier Milei, had his Libra tokens frozen by means of the Argentine court docket.
- Davis continues to be not convicted. Allegedly, he was concerned in sniping schemes with YZY and Melania tokens. The previous occurred after the scandal with Milei.
- Whereas governments and token issuers often freeze the tokens of unhealthy actors, the very existence of such a mechanism casts a shadow on cryptocurrency ideas.
- The brand new report by Bybit analysts claims 16 blockchains have already got freezing mechanisms, and 19 extra will quickly have the ability to add them too.
Hayden Davis’ tokens have been frozen
Davis, a twenty-something crypto entrepreneur, proved persuasive sufficient to reportedly enlist Argentine President Javier Milei, U.S. First Woman Melania Trump, and even Kanye West in promotional efforts tied to his memecoins — Libra, Melania, and YZY. Whereas Davis now faces authorized troubles, none of his ventures have but led to a conviction. For retail traders, nonetheless, his tasks have already triggered tons of of hundreds of thousands in losses.
Launched on February 14 and promoted by Milei, the Libra token had no actual use case — a traditional memecoin. Its worth collapsed quickly after debut, erasing investor funds. Davis, by means of his firm Kelsier Ventures, reportedly earned round $100 million from Libra — roughly the identical quantity he comprised of the Melania token. Complete investor losses throughout the schemes are estimated at $250 million.
Davis’s earnings got here by means of “crypto sniping,” a high-speed buying and selling technique that makes use of automation to capitalize on new token launches or sharp worth actions tied to alternate listings and liquidity occasions. His familiarity with upcoming tasks allowed Kelsier Ventures to behave seconds earlier than public bulletins, securing huge early good points.
Within the Libra case, Davis allegedly used a “one-sided liquidity” method to hide promote orders whereas leaving purchase information seen. Traders noticed inexperienced candles and obvious momentum, unaware that large-scale dumping was underway. The identical maneuver was reportedly utilized in March to unload Melania tokens.
In Could, a U.S. decide ordered the freezing of $57 million in USDC linked to the Libra launch. Circle, the stablecoin’s issuer, complied and froze the property. But by August 20, the tokens have been reportedly unfrozen, permitting Davis and his associates to regain entry to the funds.
Experiences don’t specify precisely how the Libra tokens are being frozen. Libra is constructed on the Solana blockchain, which features a freeze account characteristic that quickly suspends token issuance. Circle probably used this mechanism to freeze USDC on the Solana addresses related to the Libra launch. Nonetheless, there isn’t a proof that it was used within the Libra case. In response to Chainalysis, the federal government can “freeze” somebody’s property just by sending them to the government-controlled pockets.
Blockchain can freeze tokens
Whereas it’s not clear how Libra tokens are frozen, there isn’t a secret that centralized stablecoin issuers can freeze person funds. Greater than that, the GENIUS Act, signed by President Trump into regulation on July 18, requires the U.S. and overseas stablecoin issuers to freeze funds if acceptable. The requirement stems from the truth that stablecoin issuers within the U.S. are handled as monetary establishments; thus, they have to adjust to all relevant legal guidelines.
Nonetheless, even earlier than the passage of the GENUS Act, stablecoin issuers have been freezing funds throughout hacking incidents or stopping rip-off operations, and Circle’s freezing of Libra’s USDC shouldn’t be an remoted case. For example, the Cetus Protocol hack on Could 22, 2025, that drained $200 million in crypto, led the Sui Basis to freeze $162 million in stolen tokens.
Whereas the transfer saved most funds, it raised issues concerning the inherent dangers of such a focus of management. It prompted Bybit’s Lazarus Safety Lab to analysis the capabilities of main blockchains to freeze person property. The report titled “Study The Impression of Fund Freezing Capability in Blockchain” was launched on Nov. 12, 2025.
Researchers analyzed the code of 166 blockchains and located that 16 blockchains can freeze holders’ funds with out their consent. The report calls it a reintroduction of central authority over funds, which “runs counter to the core precept of decentralization.”
In response to Lazarus Safety Lab, 16 of the analyzed blockchains have already got mechanisms to freeze customers’ property unilaterally. Nineteen extra blockchains might help this selection sooner or later. Most of those blockchains use hardcoded freezing (public blacklist), config file-based freezing (non-public blacklist), and on-chain good contract freezing. The checklist of blockchains that have already got (and generally use) such mechanisms consists of BNB Chain, Sui, VeChain, Cosmos, and 12 others.
The report goals to make clear current asset freeze mechanisms so token holders can assess dangers adequately. Generally, individuals declare their crypto funds are frozen with out an obvious motive. Given all that, some danger administration is a should.
