On Wednesday, U.S. dollar stablecoin issuer Tether (USDT) stated that it wouldn’t freeze smart contract addresses sanctioned through the U.S. Office of Foreign Assets (OFAC) Control’s Specifically Designated Nationals and Blocked Persons (SDN) list for cryptocurrency trail-mixer Tornado Cash. In explaining the choice, Tether stated:
“To date, OFAC hasn’t established that a stablecoin issuer is anticipated to freeze secondary market addresses which are printed on OFAC’s SDN List or which are run by persons and entities which have been sanctioned by OFAC. Further, no U.S. police force agency or regulator makes this type of request despite our near-daily connection with U.S. police force whose demands always provide precise details.”
Tether noticed that unilaterally freezing wallet or smart contract addresses might be a “highly disruptive” and “reckless” move. “It might alert suspects of the impending police force analysis, cause liquidations or abandonment of funds and jeopardize further evidence gathering,” the issuer stated.
All U.S. persons and entities are prohibited from getting together with digital currency mixer’s USDC and Ethereum smart contract addresses around the SDN list, susceptible to stiff criminal penalties for breach. However, Tether is really a Hong Kong-based issuer nor onboards U.S. persons as customers nor conducts business within the U . s . States, even though it under your own accord follows certain U.S. rules as part of compliance.
Tether also expressed reservations regarding USD Gold coin issuer Circle’s decision to unilaterally freeze Tornado Cash smart contract addresses earlier this year. “If made without instructions from U.S. government bodies, the move by USDC to blacklist Tornado Cash smart contracts was premature and can have jeopardized the job of other regulators and police force agencies all over the world,” states Tether. The firm highlights that other stablecoin issuers located in the U.S., for example Paxos and Dai, didn’t freeze any Tornado Cash wallets. The sanctions entered impact on August 8.
