The organization that issues the dollar-pegged USDC stablecoin on the Ethereum blockchain, the CENTRE Consortium, has backlisted an address with $100,000 worth of USDC tokens in it in response to a law enforcement request.

The move was confirmed by Circle spokesperson Josh Hawkins, who said he could not provide any more details about the blacklisting, which seems to have occurred in mid-June. The company shared a statement with CoinDesk that reads:

Centre can confirm it blacklisted an address in response to a request from law enforcement. While we cannot comment on the specifics of law enforcement requests, Centre complies with binding court orders that have appropriate jurisdiction over the organization.

On the popular Ethereum blockchain explorer Etherscan, it’s possible to see the transaction in which CENTRE called a “blacklist (address investor)” function on the address, freezing the tokens on it. Who owns the address isn’t clear, but as it has been blacklisted its owner can no longer send or receive USDC on-chain.

On Circle’s website, the firm notes that the USDC on a blacklisted address may be “wholly and permanently unrecoverable.” While the USDC stablecoin runs on an open blockchain, CENTRE has the power to sanction specific accounts.

An address may reportedly be blacklisted under two circumstances: one occurs when there’s a potential security breach or a threat to the network itself. The other occurs to “comply with a law, regulation or legal order from a duly recognized U.S. authorized authority, U.S. court of competent jurisdiction or other governmental authority with jurisdiction over CENTRE.”

In both cases, CoinDesk adds, most of CENTRE’s Board of Managers, which includes Circle co-founder and CEO Jeremy Allaire and Coinbase’s chief financial officer Alesia Haas, have to vote to approve the blacklisting.

The move has set the cryptocurrency community abuzz, as most are claiming fiat-currency backed stablecoins are similar to PayPal on the blockchain, as the firms behind them have to work with regulators.

It’s worth noting that only CENTRE can blacklist addresses, and normally the funds are under user control. This appears to be the first time a USDC address has been blacklisted.

Featured image via Pixabay.