Last Updated: 25 August 2022
Tether has not (yet) frozen any USDT tokens linked to the Tornado Cash mixer. The company writes this in a press release.
Tether on the sidelines
The OFAC, the American Office of Foreign Assets Control, has not yet reported the case surrounding Tornado Cash. The authorities have a so-called SND list that includes sanctioned persons, entities, and recently, a smart contract also.
The company writes that no US law enforcement agency or regulator has yet filed a request with Tether to strip Tether owners of their funds. Nevertheless, the stablecoin issuer is in almost daily contact with US authorities.
It all started about a fortnight ago when the FIOD arrested a developer. Tornado Cash’s smart contract was also put on the sanctions list, along with a number of addresses. These are Ethereum contracts that were allegedly used to launder money.
Despite the sanctions, Tether continues to support Tornado Cash
Tether, the issuer of the USDT stablecoin, considers the freezing of Tornado Cash wallet addresses premature and is still waiting for a clear request from the authorities. https://t.co/N4DIs9Rvp7
— CryptoBNB – News Crypto (@cryptoobnb) August 25, 2022
According to the US Treasury Department, Tornado Cash was used to launder almost half a billion dollars from Lazarus cyber criminals. In other words, using pure software.
Tether can freeze addresses on the ‘secondary market’ if they want to. On the other hand, it can also turn out to be very wrong if they block addresses on their own initiative. This can disrupt enforcement investigations, we read.
So far, this has not (yet) been the case.
The company notes that the New York-regulated Paxos of stablecoin that offers BUSD and USDp did freeze wallet addresses related to Tornado Cash.
They also share an underwater sting to Circle, which “without instructions from US authorities was premature and would have jeopardised the work of other regulators and law enforcement agencies around the world.”