According to the article published yesterday by The Washington Post, Tether “may be in violation of Treasury’s new rules” as Dune Analytics data indicates that stablecoin issuer is not blacklisting accounts associated with Tornado Cash. However, “it is not clear whether Tether is legally obligated to fall in line with Treasury’s sanctions,” the article adds, pointing to the company’s Hong Kong registration.
In a blog post that appears to be responding to The Washington Post’s speculations, Tether said that it will not bar addresses linked to Tornado Cash until regulators instruct it to do so. The company hasn’t been contacted by the U.S. authorities with such requests yet.
“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 persons and entities that have been sanctioned by OFAC. Further, 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 statement read.
On August 8, the U.S. Treasury Department sanctioned cryptocurrency mixing service Tornado Cash, claiming that it has laundered $7 billion since its inception in 2019, including funds stolen by North Korean hackers from Axie Infinity’s Ronin bridge. Within hours of the announcement, stablecoin issuer Circle froze $75,000 in USDC belonging to TC users, a move that, in Tether’s opinion, “was premature and might have jeopardized the work of other regulators.”
Tether also noted that other digital asset providers, including Paxos, a NY-based BUSD and USDP issuer, and DAI, an algorithmic stablecoin with 36% of its reserves in USDC, haven’t frozen Tornado Cash wallets as well.