There has been much discussion over Canada’s decision to ‘freeze’ digital currency accounts associated with the Freedom Convoy of Canadian truckers. It is important to stress that decentralized cryptocurrency like bitcoin and Ethereum cannot be frozen within the network. The Canadian government can however flag digital currency addresses and ask centralized entities such as payment processors and crypto exchanges to block the funds.
Canadian Officials Can Flag Crypto Addresses and Threaten Exchanges, but They Can’t ‘Freeze Bitcoin’
Last week, the Canadian government and Prime Minister Justin Trudeau invoked the country’s Emergencies Act and enacted Canada’s terrorist financing policy in order to blanket cryptocurrencies donations. Trudeau and his government made this move to end the protestors occupying Ottawa’s streets.
The Canadian government managed to get Gofundme to shut down the Freedom Convoy’s fundraiser and it flagged 34 crypto addresses allegedly associated with crypto fundraisers. According to reports, Canada’s police had sent letters to crypto-asset exchanges banks and requested that they “cease facilitating any transaction with these flagged addresses”.
According to a number of financial institutions and crypto companies, the Royal Canadian Mounted Police (RCMP) did in fact send the letters. Furthermore, another report details that an Ontario Superior Court judge has ordered financial institutions to freeze any assets tied to the Freedom Convoy including digital assets.
The order was reportedly the result of a secret hearing that was initiated by Ottawa residents as well as attorney Paul Champ. Champ stated to the media that Champ “can confirm” that this Mareva order is successful in Canada and targets cryptocurrency exchanges.
Despite headlines claiming that crypto assets will be frozen immediately, it is important to remember that enforcement can only be threatened and that crypto-to-fiat off ramps are not targeted.
Yesterday, the Ontario Superior Court of Justice sent us a Mareva Injunction, ordering us to freeze and disclose information about the assets involved in the #FreedomConvoy2022 movement.
Here’s our official response. pic.twitter.com/iuxliXhN5y
— nunchuk_io (@nunchuk_io) February 19, 2022
It is impossible to freeze a bitcoin (BTC) or ethereum (ETH) address and render it useless to the owner. It is possible to make a crypto owner’s private keys public by using force, threats of imprisonment, or even death. This is why fundraisers, like the BTC fund that raised 21 bitcoin, utilize multi-signature controls.
According to the software developers behind the non-custodial bitcoin wallet Nunchuk, the team was sent a Mareva injunction letter. Nunchuk wrote back to the Ontario Superior Court of Justice and told the court it could not comply with the orders.
“Dear Ontario Supreme Court Judge, Nunchuk “is a self-defense collaborative, multisig bitcoin wallet,” the Nunchuk group’s letter states. We are not security finance intermediaries, but a software provider. Our software is completely free to use. It protects privacy and helps people to eliminate single points failures and save bitcoin as safely possible.” Nunchuk’s letter includes:
We do not collect any user identification information beyond email addresses. We do not have keys. We don’t have keys. Learn how personal keys and self-defense work. We will help you when the Canadian dollar becomes worthless.
Jesse Powell, CEO of
Kraken: ‘We can’t protect you — stick to real crypto ‘
Jesse Powell, CEO of
Kraken, stated on Twitter that crypto users should not store their funds on centralized platforms if they are concerned about having their crypto funds frozen. Responding to someone commenting about crypto exchanges freezing funds, Powell said that this was “100%” the case.
“100% yes it has/will happen and 100% yes, we will be forced to comply,” said Powell. “If you’re worried about it, don’t keep your funds with any centralized/regulated custodian. We cannot protect you,” Powell Tweeted. In a later tweet, Powell discussed that going on-chain to top reserve tokens like stablecoins may not be safe either.
You are not always safe by just going on-chain,” Powell stated. “The top reserve tokens with centralized issuance and redemption, like USDT and USDC have centralized control of freeze functionality that can be commandeered as easily as a bank account. He said, “Keep it real crypto.” Both USDC and USDT issuers have frozen specific stablecoin addresses in the past.
In July 2020, Circle’s Centre Consortium blacklisted $100,000 in USDC after getting a request from law enforcement. Tether has blacklisted hundreds of USDT addresses and last month, the company froze $160 million worth of USDT. Tether has
frozen $ million of
This story contains tags
34 addresses, 34 crypto addresses, Bitcoin, Canada, Centralized Exchanges, Centralized payment providers, Centralized Platforms, Centre Consortium, Circle, Ethereum, Freedom Convoy, Jesse Powell, Kraken, Kraken CEO, Ontario Superior Court, Paul Champ, Payment Processors, RCMP, Royal Canadian Mounted Police, stablecoin addresses, Stablecoin freezes, Stablecoins, USDC, USDT
What do you think about Jesse Powell’s comments about exchanges not being able to protect you and his sticking with ‘real crypto’ statement? Please comment below to let us know your thoughts on this topic.
Jamie Redman
Jamie Redman, a journalist and financial tech expert living in Florida, is the News Lead at Bitcoin.com News. Redman has been an active member of the cryptocurrency community since 2011. Redman is passionate about Bitcoin, open-source codes, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
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