Stablecoin-Issuer Tether ‘Holds Firm’ on Not Freezing Tornado Cash Addresses – Here’s Why

The issuer of the most widely used stablecoin says it is not freezing addresses linked to sanctioned crypto mixer Tornado Cash.

Early this month, the Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it is banning Americans from using the Tornado Cash, claiming that the service is a national security threat.

In a new statement, USDT issuer Tether says that pending a direct request from authorities, it will not ban transactions with Tornado Cash-linked addresses.

Tether says that while it generally responds to requests from law enforcement to freeze certain privately-held wallets, it has not yet received notice to ban Tornado Cash addresses that were recently included in OFAC’s Specially Designated Nationals And Blocked Persons List (SDN).

“Tether has not been contacted by US officials or law enforcement with a request to freeze the addresses sanctioned by OFAC…Tether normally complies with requests from US authorities, being in contact with them almost on a daily basis.”

Tether says that completely freezing the accounts without any verified instruction from authorities could be a reckless move that can disrupt ongoing investigations.

“In our dealings with law enforcement we are sometimes made aware of addresses potentially related to crime and are specifically instructed not to freeze the addresses without the explicit request from law enforcement as this could alert suspects of the law enforcement investigation, cause liquidations or abandonment of funds and jeopardize further connections that might have been established.”

USD Coin (USDC) issuer Circle, has already blacklisted wallets linked to Tornado Cash, but Tether says that other digital asset providers, including Binance USD (BUSD) issuer Paxos have not yet frozen the sanctioned addresses.

“We believe that, if made without instructions from US authorities, the move by USDC to blacklist Tornado Cash smart contracts was premature and might have jeopardized the work of other regulators and law enforcement agencies around the world.”

 

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