One of the highlights of the week is the announcement of the launch of Gemini’s dollar-pegged stablecoin, Gemini Dollar (GUSD) by the Winklevoss twins.

However, there are concerns about the dollar-backed cryptocurrency. A researcher named Alex Lebed revealed that Gemini has the ability to freeze any GUSD accounts.

GUSD can be frozen at any time: researcher

The most important feature of traditional cryptocurrencies is their decentralization. The main reason behind the creation of cryptocurrencies is to transfer power from central bodies and to the masses.

Security researcher Alex Lebed doesn’t believe GUSD is true to the ethos of cryptocurrencies.

According to Alex Lebed, a blockchain researcher, GUSD includes a provision that allows its founders Gemini to freeze any account. He made this statement after reviewing the code of Gemini dollar smart contract.

It is worthy to note that Lebed is at the moment fully contracted to another stablecoin company. He also revealed that after reviewing the code, he realized that GUSD makes use of an ERC20 Proxy contract which allows Gemini to upgrade the contract every 24 hours.

Such power means that the exchange can make unilateral decisions such as making all tokens non-transferable.

For decentralization enthusiasts, these findings are worrying.

In Gemini’s defense, regulators require the company to prevent and respond to any potential or actual wrongful use of stablecoin, including but not limited to its use in an illegal activity, market manipulation, or other similar misconduct.

For this reason, they claim they hold the right to suspend the activity of any user. Gemini had explained this earlier in the whitepaper of GUSD.

The company noted that considering the fact that the stablecoin is a digital currency that has a value pegged to the U.S Dollars stored in a bank, the token must be looked at in a different light.

Gemini isn’t the only exchange to have received a license from the New York Department of Financial Services (NYDFS), to create a stablecoin, with Paxos receiving a similar approval. It is still unclear if Paxos also has the ability to freeze user accounts.

Stablecoins continue to mesh in controversy

Stablecoins have had a torrid time in the cryptocurrency space. The leading stablecoin, Tether has been involved in scandalous situations over the past few months.

Recent reports showed that researchers claim to have found evidence Tether helped artificially inflate the price of Bitcoin last year.

Tether was accused of printing USDT during bear cycles. Just last month, Tether issued $50 million new USDT tokens. This took place at a time when Bitcoin price was down.

With that amount, USDT’s market cap jumped to $2.4 billion and became the 8th largest cryptocurrency.

How GUSD will perform in the market is still unknown but the recent revelation of top-down control may affect the stablecoin negatively.