Stablecoin issuer Tether stood its ground not to bar Tornado cash until it receives any request from US law enforcement or law regulators to do so. Tether has reiterated its decision not to freeze sanctioned wallet addresses associated with Tornado cash.
Tether stated that OFAC has not indicated that a stablecoin issuer is supposed to freeze secondary market addresses that are published on OFAC’s SDN List or sanctioned entities.
However, the company “may be in violation” of the new Treasury Department sanctions aimed at Tornado Cash. Tether argues that no US law enforcement agency or regulator has made such a request despite our near-daily contact with US law enforcement whose requests always provide precise details.
The Treasury Department now lists several sanctioned wallet addresses for ETH and the center’s stablecoin USD Coin (USDC). While Tether’s USDT does not appear by name on the list, it can interact with ETH addresses using the ERC-20 token.
For instance, this Tornado Cash router address processed USDT transactions days after the Treasury sanctions.
Tether also mentioned that it works closely with US law enforcement and does freeze privately held wallets when it receives legitimate requests from regulatory authorities. In this case, on the other hand, it has not yet received any such requests from the US government regarding sanctioned wallets with ties to Tornado Cash.
“Tether normally complies with requests from US authorities. For example, we have been cooperating on various freezes with US law enforcement including in the last two weeks after OFAC sanctions on Tornado Cash” the company said.
However, no specific request has been put to Tether related to freezing relevant Tornado Cash addresses.
Yesterday, US lawmaker Tom Emmer also questioned OFAC to justify the unprecedented sanctioning of privacy mixer Tornado Cash. He argued that OFAC’s sanctions on Tornado Cash are the first sanctions issued against something other than a person/entity.
Moreover, Tether clarified that unilaterally freezing secondary market addresses could be a highly reckless and disruptive move on its part. Even if Tether notices suspicious activities on such an address, freezing without the verified instruction of law enforcement might interfere with ongoing investigations.
