Crypto Experts Raise Flags: Is PayPal’s PYUSD Stablecoin Truly Trustworthy?

• Crypto influencer warns of risks in PayPal’s PYUSD: “Did you really think $PYUSD stablecoin would allow you to freely transact?”
• $2,500 penalty for content censorship linked to PYUSD highlighted.
• Another user reminded of PayPal’s terms of service enabling the platform to seize funds based on users’ speech.

In a recent statement, prominent crypto influencer CryptoWendy has drawn attention to the potential risks associated with PayPal’s newly launched stablecoin, Paypal USD (PYUSD). Drawing attention to a video she produced back in 2022 when PayPal first introduced their $2,500 penalty for content censorship, CryptoWendy posted a thought-provoking question: “Did you really think $PYUSD stablecoin would allow you to freely transact?”

CryptoWendy’s remarks come as a stark reminder of the looming risks within PayPal’s stablecoin ecosystem. She has highlighted the fine of $2,500 that PayPal could impose on specific users for sharing content deemed as misinformation. Notably, the determination of what constitutes “misinformation” is left to PayPal’s discretion.

Another prominent voice, Erik Voorhees, founder of the crypto exchange ShapeShift, has echoed CryptoWendy’s concerns. Voorhees, urging caution, advised users to assume that all centralized stablecoins possess the capability to freeze and even obliterate user balances at the platform’s discretion.

Similarly, one user, reminded others that PayPal had already included terms of service enabling them to seize funds based on users’ speech. In response, Voorhees likened PayPal’s actions to those of traditional banks, hinting at an ongoing debate about the level of control financial institutions wield over users’ assets.

The discovery of the “assetProtection” role within the PYUSD smart contract system has brought these concerns into sharper focus. Critics have labeled this feature a “centralization attack vector,” expressing reservations about the conflict between decentralized principles, which cryptocurrencies are built upon, and the centralized control reminiscent of traditional financial systems.

Pashov, a respected expert in smart contracts security, raised a red flag by identifying a potential vulnerability within PYUSD’s code. This vulnerability could allow for the freezing and subsequent wiping of account balances through specific functionalities embedded within the smart contract. The revelation of this “centralization attack vector” has ignited a broader debate within the crypto community about the balance between centralization and decentralization.