In their words, “Tether has not been contacted by US officials or law enforcement with a request to freeze the addresses sanctioned by OFAC…Tether normally complies with requests from US authorities, being in contact with them almost on a daily basis.”
The issuer of the most popular stablecoin, Tether, says it will not freeze addresses linked to the sanctioned crypto mixer, Tornado Cash.
The Treasury Department's Office of Foreign Assets Control (OFAC) announced earlier this month that it prohibits Americans from using Tornado Cash, claiming that the service poses a national security risk.
The USDT issuer Tether, in a new statement, states that it will not restrict transactions with Tornado Cash-linked addresses unless it receives a direct request to do so from authorities.
Tether asserts that, while it generally responds to law enforcement requests to freeze certain privately held wallets, it is yet to receive notice to ban Tornado Cash addresses that were recently added to OFAC's Specially Designated Nationals And Blocked Persons List (SDN).
In their words,
“Tether has not been contacted by US officials or law enforcement with a request to freeze the addresses sanctioned by OFAC…Tether normally complies with requests from US authorities, being in contact with them almost on a daily basis.”
According to Tether, completely freezing the accounts without any verified instruction from authorities could be a risky move that could negatively impact ongoing investigations.
They also stated that in their dealings with law enforcement, they are occasionally informed of addresses potentially related to crime and are specifically instructed not to freeze the addresses without the explicit request of law enforcement as this could alert suspects of the law enforcement investigation, cause liquidations or abandonment of funds, and jeopardize any further connections that may have been established.
Circle, the issuer of USD Coin (USDC), has already blacklisted Tornado Cash-linked wallets. Still, Tether claims that other digital asset providers, including Binance USD (BUSD) issuer Paxos, have not yet frozen the sanctioned addresses.
Tether believes that USDC's decision to blacklist Tornado Cash smart contracts was hasty and may have jeopardized the work of other regulators and law enforcement agencies worldwide.
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