- Tether has announced that it has not frozen and USDT coins held in sanctioned Tornado Cash addresses
- The company says that until it receives a formal request from law enforcement it sees no need to
- According to Tether, proactively freezing coins can actually hamper police investigations
Tether announced yesterday that it has not received a formal request from a law enforcement agency to freeze any funds locked in sanctioned Tornado Cash addresses, and won’t freeze them until it does. The issuer of the biggest stablecoin in the crypto space released a statement yesterday to say that where other stablecoin issuers had voluntarily frozen funds held in the addresses recently sanctioned by the Treasury Department’s Office of Foreign Assets Control (OFAC), it would hold off until specifically asked to do so.
Tether Waiting for Official Request
The Tornado Cash affair has been the biggest talking point in the crypto world ever since OFAC sanctioned Tornado Cash and 44 Ethereum addresses connected to North Korean hacking groups just over two weeks ago, with plenty of criticism over the decision to do so.
While other stablecoin issuers such as Circle responded by freezing any of their coins caught up in the 44 addresses, Tether said yesterday that it would not do so until told to by law enforcement:
…we have been cooperating on various freezes with US law enforcement, including in the last 2 weeks after the OFAC public disclosure about Tornado Cash, and no specific request has been put to us related to freezing relevant Tornado Cash addresses.
Tether also criticised the actions of issuers that did freeze coins, such as Circle and Paxos:
We believe that, if made without instructions from US 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.
Tether clarified this by saying that occasionally it is instructed by law enforcement not to freeze coins related to criminal enterprises in order to allow the tracing of the funds.
Tether Still Gets Pelters for “Supporting Fraud”
The reaction was interesting, with those who may under usual circumstances decry Tether’s centralisation now complaining about their complicity in allowing money laundering:
Didn’t expect anything less from the crooks at Tether. Money laundering needs Tornado Cash. Tether needs Tornado Cash.
— Danny (@danny_mx) August 24, 2022
So you openly announce your support for money laundering and fraud. Good luck with that approach. Don’t be surprised when you’ll find yourself complicit.
— Mac (@CryptoMacTrader) August 24, 2022
Clearly, Tether bashing is still in vogue, whatever the company does.
