First Flight #16: Mafia Takedown

Summary

The CrimeMoney token is not a real stablecoin.

• Essentially, `CrimeMoney adds another layer of centralization on top of the USDC token that is already centralized in itself.

• A token issued and controlled by a crime organization is going to be targeted by law enforcement bodies.

• USDC is not always redeemable for CrimeMoney:

-- external users can deposit on their USDC to get CrimeMoney tokens themselves, but cannot withdraw that USDC with their CrimeMoney tokens;

-- gangmembers can withdraw their depositied USDC with their CrimeMoney tokens as long as they do not quit the gang or the godfather does not kick them out from the gang;

-- if Centre, the governing body of the USDC contract blacklists the address holding the depositied USDC tokens or the addresses of gangmembers, withdrawal will not work.

With so much centralization, trust issues, and associated risks - especially without any advantage or value proposition over USDC -, the CrimeMoney token will have little to no adoption and abismal liquidity.

Considering these, it is apparent from the very beginning that the CrimeMoney token surely cannot fulfill the 3 functions of money:

• storage of value

• unit of account

• medium of exchange

Vulnerability details

1. Centralization and Legal Risks

The centralization of CrimeMoney by a criminal organization makes it highly susceptible to legal action and regulatory scrutiny. Authorities can easily target and dismantle such centralized entities, freezing or seizing assets.

2. Trust and Adoption

Trust is a fundamental component of any currency, especially stablecoins. Given the dubious nature of CrimeMoney and its issuer, it is unlikely that users or other platforms will trust and adopt it. Without broad acceptance, its utility and value are severely limited.

3. Redemption Issues

The inability for all users to redeem USDC with CrimeMoney tokens undermines its claim as a stablecoin. True stablecoins must be easily redeemable for their pegged asset to maintain their value. The selective redemption rights create an inherent unfairness and reduce the token's reliability.

4. Blacklisting by Centre

The potential for addresses to be blacklisted by Centre adds another layer of risk. If critical addresses are blacklisted, it can freeze significant amounts of funds and disrupt the functionality of the entire system. This risk further erodes trust and reliability.

5. Lack of Clear Use Case

There is no clear advantage or unique value proposition for using CrimeMoney over directly using USDC. The additional complexity and risk introduced by CrimeMoney do not provide any benefits to justify its existence.

Recommendations

Reconsider the need for the CrimeMoney token and its purpose.