Tether Upholds its Decision of not  Banning Tornado Cash Addresses

Key Takeaways:

  • Tether claimed that despite being in touch with law enforcement practically every day, no requests to freeze Tornado Cash addresses had been made.
  • Tether added that law enforcement occasionally requests that they refrain from freezing flagged accounts to allow them to finish their investigations.
  • Tether will not act unless instructed to do so.

Tether, a stablecoin issuer, confirmed its stance not to block Tornado Cash addresses, pointing out that it has not yet received such demands from American authorities or law enforcement.

Warning sirens went out in the cryptocurrency market after the US government recently imposed sanctions on virtual currency mixer Tornado Cash. The Specially Designated Nationals and Blocked Persons List of the US Treasury Department has prohibited Tornado Cash, an Ethereum-based coin mixer (SDN). US investors are no longer permitted to use the chain of the coin-mixing service for illicit reasons due to the sanction.

Even the biggest Ethereum miner, Ethermine, ceased handling Tornado cash transactions.  Ethereum addresses connected to the tool have been added to the OFAC’s list of specially designated nationals and prohibited parties.

Tether issued a statement warning that unilaterally freezing secondary market addresses “may be an extremely disruptive and dangerous decision by Tether.”

Tether noted in the blog post that the law enforcement team occasionally receives explicit instructions not to block specific suspected addresses since doing so might alert the culprits. This will make it impossible to identify additional connections or suspects.

Some people, including @CryptoMacTrader, believe that this action amounts to Tether publicly endorsing fraud and money laundering.

Within hours after the sanctioning, Tornado Cash smart contracts were blacklisted by Circle, the creator of stablecoin USDC. “We feel the move by USDC… was premature and may have harmed the work of other regulators and law enforcement agencies around the world if made without instructions from U.S. authorities,” stated Tether.

Tether wants to remind everyone that other digital asset issuers, such as Paxos, a NY-regulated stablecoin that issues BUSD and USDp and makes up over $20 billion of the market capitalization for all cryptocurrencies, haven’t frozen their exchanges with Tornado Cash.

Similarly, there was no freeze on DAI, an algorithmic stablecoin with 36% of its holdings in USDc (about 3.4B USD).

The blog post further indicates that no demand has been made by the US officials seeking to freeze any addresses that the OFAC blacklists.

For instance, “no specific request has been made to us relating to freezing relevant Tornado Cash addresses, and we have been complying on numerous freezes with US law enforcement, including in the previous two weeks since the OFAC public statement about Tornado Cash.”

It is crucial to remember that Tether is not a “US person“, does not conduct business there, and does not accept US citizens as customers. Tether does, however, include OFAC Sanctions in its top-notch compliance procedures.

Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

Newsletter

Crypto News, NFTs and Market Updates

Crypto Products

Can’t find what you’re looking for? Type below and hit enter!

Can’t find what you’re looking for? Type below and hit enter!