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While the crypto community is still talking about the US government banning ethereum mixing platform Tornado Cash, stablecoin issuer Tether Holdings Limited revealed on Wednesday that the company would not be “freezing Tornado Cash addresses.” Tether’s recently published blog post on the subject says the company is awaiting instructions from law enforcement.
On August 8, the U.S. Treasury Department’s financial watchdog, the Office of Foreign Asset Control (OFAC), banned ethereum mingling application Tornado Cash, and since then, OFAC’s sanctions enforcement has been met with controversy. Of course, OFAC’s actions caused a ripple effect, and a number of companies such as Circle Financials and Coinbase’s Center consortium, Github and Discord took action. For example, were developers suspended from Github, the Tornado Cash Discord server was deleted, and reports noted that Center blacklisted dozens of ethereum addresses and froze 75,000 USDC.
Tether Stands By Decision Not to Freeze Tornado Cash Addresses, Awaits Instructions from Law Enforcement
— Tether (@Tether_to) 24 August 2022
According to a blog post published by Tether Holdings Limited published 16 days after OFAC’s ban, the company explains that as of now it is not freezing USDT assets held in the Tornado Cash mixer. Tether says the company works regularly with law enforcement and is in daily contact with “key officers.” If a law enforcement official makes a legitimate request to freeze a private wallet, Tether will “comply with the freeze”, but we do not freeze wallets for exchanges/services,” the company added.
Tether’s blog post continues:
So far, OFAC has not indicated that a stablecoin issuer is expected to freeze secondary market addresses that are published on OFAC’s SDN list or that are operated by individuals and entities that have been sanctioned by OFAC. Furthermore, no US law enforcement agency or regulator has made such a request despite our almost daily contact with US law enforcement, whose requests always provide accurate details.
Furthermore, Tether says that choosing to unilaterally freeze secondary market addresses “could very well be a very disruptive and reckless move.” The company also described that there have been cases where law enforcement has asked the company not to freeze suspect private wallets so that suspects of an investigation are not notified and liquidate the funds. Tether’s blog post also calls out a number of stablecoin issuers such as Paxos, a New York-based regulated company.
Tether said Paxos did not freeze Tornado Cash wallets and USDT’s issuer further noted that Makerdao, the issuer of the decentralized finance (defi) stablecoin DAI did not proceed with any kind of freeze. However, Tether appears to disagree with the move made by USDC’s issuers. “We believe that, if done without instructions from US authorities, the USDC’s move to blacklist Tornado Cash smart contracts was premature and may have jeopardized the work of other regulators and law enforcement agencies,” the blog post added on Wednesday.
What do you think of Tether’s blog post saying it will not freeze USDT linked to Tornado Cash and that it is awaiting instructions from law enforcement? What do you think of the company’s comment about USDC’s issuer blacklisting stablecoin wallets? Let us know what you think about this topic in the comments section below.
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