‘Not-So-Decentralized’ Ripple Freezes $1m in User Funds
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Article by Sean Wince
The Ripple payment network is facing criticism this week over revelations about the fungibility of its assets. It’s come to light that Ripple gateways – the onramps and offramps of the network – have the ability to ‘freeze’ user funds at will. Furthermore, Ripple Labs has already used its influence to convince Bitstamp, a prominent gateway and exchange, to freeze $1 million worth of funds belonging to Ripple’s departed founder Jed McCaleb.
Ripple ‘gateways’ act as trusted entry and exit points for the payment network, providing users with specialized institutions for converting regular currencies and assets into IOU’s which can be traded on Ripple. However, there exists a relatively new feature in the Ripple protocol that enables gateways to freeze those IOU’s and prevent them from being traded. This feature was first implemented in August of last year and phased in over the following month.
A page on the Ripple wiki describing the feature was submitted to the /r/Bitcoin subreddit Saturday and catalyzed a heated discussion about the issue. The Ripple wiki subsequently went down, but can still be accessed via the Internet Archive.
This post was published at Inside Bitcoins on Apr 21, 2015.