Tether will not freeze Tornado wallets unless directly ordered

Key points to remember

  • Tether announced today that it will not freeze Tornado Cash addresses unless instructed to do so.
  • The stablecoin issuer said it was working with law enforcement but had not received a freeze order.
  • Tornado Cash is an Ethereum coin mixer whose addresses were sanctioned by OFAC earlier this month.

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Stablecoin company Tether said today that it will not freeze Tornado Cash addresses without a specific order from law enforcement.

Tether did not receive freeze commands

Tether says there was no order to freeze Tornado addresses.

Several addresses linked to the Ethereum coin mixer Tornado Cash were added to a US sanctions list on August 8.

In a announcement Today, Tether said it is cooperating with US law enforcement on various freezes, including freezes related to recent Tornado Cash sanctions.

However, Tether claimed that it was not specifically ordered to freeze Tornado Cash addresses. He said the Office of Foreign Asset Control (OFAC) “has not indicated that a stablecoin issuer should freeze secondary market addresses” on its sanctions list or belonging to a sanctioned entity.

The company wrote that it was in “almost daily contact” with law enforcement and added that it complied with orders when it received a legitimate request from law enforcement.

Freezing an address without a request from law enforcement could be “very disruptive and reckless,” Tether says. It says it could warn suspects, cause asset holders to sell or abandon their funds, or interfere with ongoing investigations.

Tether also said that it freezes private wallets but does not freeze wallets belonging to exchanges and services. This statement seems to allude to a popular argument that sanctions against Tornado Cash are the first to target a technology instead of a person or group.

Finally, Tether criticized Circle’s initial decision to blacklist Tornado Cash addresses in relation to its USDC stablecoin. Tether called Circle’s decision “premature” and potentially damaging to law enforcement efforts. He noted that other stablecoin issuers such as Paxos and MakerDAO have not frozen these addresses.

Disclosure: At the time of writing this article, the author of this article owned BTC, ETH, and other cryptocurrencies.

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