According to Pedro Magalhães, a blockchain developer who claims to have reverse-engineered Brazil’s pilot central bank digital currency (CBDC) project has uncovered that the source code used by the South American nation would allow it to freeze and reduce account balances, which has raised some flags in the crypto community.

The source code of the Brazilian CBDC project was posted by the nation’s central bank on GitHub on July 6th, where the central bank also stated that the pilot project is only intended to serve as an experiment within a test environment and that the current “presented architecture” may be tweaked.

Magalhães uncovered the source code’s functions via “reverse engineering”, which include the Banco Central do Brazil’s abilities to freeze and unfreeze accounts, increasing and decreasing wallet balances, moving currencies from one wallet address to another, and creating or burning the ‘digital real’ on a specific address at will.

According to the developer, the code does not present any specificity with regards to the circumstances which will lead tokens to be frozen, and who has the power to do so:

“One thing is to agree with an operation and execute a DeFi operation that involves different blockchains; another completely different thing is an institution having the ability to freeze the balance on its initiative, and that’s precisely how they’ve developed the smart contracts.”

Sources:

https://cointelegraph.com/news/brazil-cbdc-pilot-source-code-can-freeze-funds

https://cryptoslate.com/brazilian-cbdc-pilot-source-code-includes-methods-to-freeze-drain-wallets/

https://github.com/bacen/pilotord-kit-onboarding

https://www.linkedin.com/posts/pemagalhaes_github-ioralabsrealdigitalsmartcontracts-activity-7082009809549484032-Beqi