Ripple CTO Says Freeze-Proof Stablecoins Can’t Work As Circle Misses $285M Drift Hack

The post Ripple CTO Says Freeze-Proof Stablecoins Can’t Work As Circle Misses $285M Drift Hack appeared first on Coinpedia Fintech News

Can a stablecoin choose not to freeze your funds and still be a stablecoin? That question, posted on X by Columbia Business School professor Omid Malekan, just got a sharp technical reality check from Ripple CTO Emeritus, David ‘JoelKatz’ Schwartz.

The timing could not be more loaded.

Malekan’s argument was straightforward. In a space where every stablecoin issuer looks identical, refusing to freeze or seize – pushing neutrality “to the boundaries of what’s possible legally” – would be a “killer GTM strategy.”

His reasoning: DeFi users and most retail holders want censorship resistance, and no major issuer is offering it.

Ripple’s CTO Spotted the Flaw Immediately

Schwartz went to the legal foundation.

He pushed further. If you remove the legal obligation to redeem, the very thing that makes a stablecoin worth holding disappears with it, and Schwartz made clear he sees no way around that contradiction.

The logic is tight. Freeze resistance and legal redeemability may be mutually exclusive by design.

Why This Debate Is Important Now

The exchange landed against a backdrop that made it impossible to ignore. On March 23, Circle froze 16 active business wallets under a sealed U.S. civil court order. On-chain investigator ZachXBT called it “potentially the single most incompetent freeze” in over five years of investigations, adding that “an analyst with basic tools could have identified within minutes that these were operational business wallets.”

Then on April 1, Circle drew criticism again, this time for the opposite reason, after USDC moved through its own cross-chain infrastructure during the $285 million Drift protocol hack without intervention.

Also Read: Ripple Lists RLUSD on South Korea’s Coinone to Cap a Month of Major Expansion

The Law Has Already Answered Part of This

The GENIUS Act, now signed into law, already requires stablecoin issuers to maintain the technical capability to freeze when legally required. Malekan’s neutral stablecoin, at least in the U.S., isn’t legally viable today.

What Schwartz’s pushback really surfaces is a harder question: not whether freeze powers should exist, but whether any issuer has a coherent process for using them.

That answer, after the last ten days, remains open.

Read More: Clarity Act 2026 Sparks Crypto Divide Over Stablecoin Yield Ban