by Christina Maas, Reclaim The Net:
In a disquieting discovery, the Brazilian Central Bank Digital Currency (CBDC) is reportedly designed with a feature enabling the government to freeze user funds and adjust balances. The revelation emerged after Pedro Magalhaes, a prominent blockchain developer and founder of Iora Labs, managed to decode the underlying technical details of the CBDC.
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Magalhaes analyzed the Application Programming Interface (API), available on the monetary authority’s Github account. His finding spotlighted a potential, controversial control lever for the Brazilian government, yet there has been an ominous silence from officials in response to his discovery.
Cryptocurrency expert and Brazilian journalist, Vini Barbosa, corroborated the revelation on social media. As a reporter for the crypto-focused news outlet, Portal Do Bitcoin, he validated Magalhaes’ assessment, stating that he had directly engaged with the Brazilian authorities.
Barbosa elaborated on Twitter, stating that the power to “freeze or arrest amounts” within the system aligns with existing Brazilian legislation as per the Central Bank’s response.
Initially, Magalhaes, who exposed the issue on LinkedIn for educational purposes, speculated that the freeze feature would be confined to DeFi or CeFi operations, wherein a balance freeze might be warranted to execute a smart contract operation. However, he was informed that the central bank held discretionary power to invoke this feature as and when deemed necessary.
This has triggered apprehensions among Brazilians, who are wary of their country’s tumultuous financial past. Their fears are not baseless, as the Brazilian president once imposed a freeze on all citizen finances, lasting a whopping 18 months in the 1990s.
Magalhaes advocates for increased transparency and public awareness to counteract the central bank’s extensive authority over the CBDC.
