On Wednesday, U.S. greenback stablecoin issuer Tether (USDT) stated that it would not freeze sensible contract addresses sanctioned by the U.S. Office of Foreign Assets (OFAC) Control’s Specially Designated Nationals and Blocked Persons (SDN) record for cryptocurrency trail-mixer Tornado Cash. In explaining the choice, Tether stated:
“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 U.S. law enforcement agency or regulator has made such a request despite our near-daily contact with U.S. law enforcement whose requests always provide precise details.”
Tether identified that unilaterally freezing pockets or sensible contract addresses may very well be a “highly disruptive” and “reckless” transfer. “It could alert suspects of an impending law enforcement investigation, cause liquidations or abandonment of funds and jeopardize further evidence gathering,” the issuer stated.
All U.S. individuals and entities are prohibited from interacting with the digital foreign money mixer’s USDC and Ethereum sensible contract addresses on the SDN record, topic to stiff prison penalties for violation. However, Tether is a Hong Kong-based issuer and neither onboards U.S. individuals as prospects nor conducts enterprise within the United States, though it voluntarily follows sure U.S. laws as part of compliance.
Tether additionally expressed reservations concerning USD Coin issuer Circle’s resolution to unilaterally freeze Tornado Cash sensible contract addresses earlier this month. “If made without instructions from U.S. authorities, the move by USDC to blacklist Tornado Cash smart contracts was premature and might have jeopardized the work of other regulators and law enforcement agencies around the world,” says Tether. The agency factors out that different stablecoin issuers based mostly within the U.S., reminiscent of Paxos and Dai, did not freeze any Tornado Cash wallets. The sanctions went into impact on August 8.
