The issuer of the USDT stablecoin — the company Tether — has refused to freeze addresses associated with the transaction-mixing service Tornado Cash without proper requests from law enforcement authorities.
Tether Holds Firm on Decision Not To Freeze Tornado Cash Addresses, Awaits Law Enforcement Instruction https://t.co/zpsI9lKLlf
— Tether (@Tether_to) August 24, 2022
“So far, OFAC has not indicated that the issuer should freeze secondary-market addresses published on the SDN list or controlled by persons and entities subject to OFAC sanctions. Moreover, no law enforcement agency or regulator in the United States has made such a request, despite our close contacts,” the statement said.
According to the press release, unilateral address blocking is considered by the company to be a “reckless and destructive” measure. According to experts, such actions could negatively affect law enforcement investigations.
In Tether they criticized the Circle behind the USDC stablecoin, which put the addresses tied to the mixing service on a blacklist:
“We consider Circle’s measures taken without government instruction premature. They may jeopardize the work of regulators and law enforcement”.
Unstoppable Finance’s growth lead Patrick Hansen stressed that, despite its position, Tether actively blocks addresses on the Ethereum network. On this metric, the company is almost ten times ahead of the USDC issuer.
USDT has banned almost 10x more addresses on Ethereum than USDC pic.twitter.com/g4sn1XwkQX
— Patrick Hansen (@paddi_hansen) August 24, 2022
Infrastructure platforms Infura and Alchemy blocked RPC requests to Tornado Cash. The non-custodial exchange Uniswap also closed access to its platform for a number of relevant addresses. Similar measures were taken DEX dYdX.
On 8 August 2022 OFAC added to sanctions list the Tornado Cash site, as well as 39 Ethereum addresses and 6 USDC addresses.
On 12 August Dutch authorities arrested an unnamed man suspected of involvement in money laundering and concealing criminal financial flows through a cryptocurrency mixer. Later it became known that this was the service’s developer, Alexey Pertsev.
On 22 August in Amsterdam a rally was held in his support. Participants said that open-source code is not a crime, and authorities should pursue the real perpetrators.
Kraken CEO Jesse Powell called the Tornado Cash sanctions unconstitutional, while TRM Labs analysts called them a challenge to compliance. Pertsev was also supported by Cardano founder Charles Hoskinson.
As reported on 24 August, the Dutch court remanded Pertsev in custody and set a 90-day period for the first hearing.
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