On Wednesday, stablecoin issuer Tether (USDT) said it would not freeze sanctioned smart contract addresses on the U.S. Office of Foreign Assets Control (OFAC) Specially Designated Nationals and Blocked Persons (SDN) list. United for the cryptocurrency mixer, Tornado Cash. Explaining the decision, Tether said:
“So far, OFAC has not indicated that a stablecoin issuer is expected to freeze secondary market addresses that are published on the OFAC SDN List or are operated by individuals and entities that have been sanctioned by OFAC. , no United States law enforcement agency or regulator has made such a request despite our almost daily contact with United States law enforcement whose requests always provide accurate details.”
Tether noted that unilaterally freezing wallet addresses or smart contracts could be a “highly disruptive” and “reckless” move. “It could alert suspects to an impending police investigation, lead to liquidations or withdrawals of funds, and jeopardize the collection of further evidence.” the sender said.
All US persons and entities are prohibited from interacting with the SDN-listed virtual currency mixer USDC and Ethereum smart contract addresses, and are subject to severe criminal penalties for violations. However, Tether is a Hong Kong-based issuer and does not hire US persons as clients or conduct business in the US, although it voluntarily complies with certain US regulations as part of enforcement measures.
Tether also expressed reservations about USD Coin issuer Circle’s decision to unilaterally freeze Tornado Cash smart contract addresses earlier this month. “If done without instructions from US authorities, USDC’s move to blacklist Tornado Cash smart contracts was premature and could have jeopardized the work of other regulators and law enforcement agencies around the world. world”, Tether says. The company notes that other US-based stablecoin issuers, such as Paxos and Dai, did not proceed to freeze any Tornado Cash wallets. The sanctions went into effect on August 8.
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