Tether refuses to block Tornado Cash-linked addresses without requests from authorities

Published: 25.08.2022

USDT Stablecoin issuer Tether has refused to freeze addresses associated with the Tornado Cash transaction-mixing service without appropriate requests from law enforcement authorities.

“So far, OFAC has not indicated that an issuer should freeze secondary market addresses published on the SDN list or operated by individuals and entities subject to OFAC sanctions. Furthermore, no such request has been made by any US law enforcement agency or regulator, despite our close contacts,” the statement said.

According to the press release, the company sees the unilateral blocking of addresses as a “reckless and destructive” measure. According to experts, such actions could negatively impact law enforcement investigations.

Tether criticised Circle, the company behind the USDC stablecoin, which has blacklisted addresses associated with the mixing service:

“We believe Circle’s actions taken without guidance from authorities are premature. They could jeopardise the work of regulators and law enforcement agencies.”

Unstoppable Finance development manager Patrick Hansen stressed that despite its stance, Tether is actively blocking addresses on the Ethereum network. The company is almost ten times ahead of issuer USDC in this regard.

Infrastructure platforms Infura and Alchemy have blocked RPC requests to Tornado Cash. Non-custodial exchange Uniswap has also shut down access to its platform for a number of relevant addresses. Similar action was taken by DEX dYdX.

On 8 August 2022, OFAC put the Tornado Cash website, as well as 39 Ethereum- and 6 USDC-linked addresses, on its sanctions list.

On 12 August, Dutch authorities arrested an unnamed man on suspicion of involvement in money laundering and concealing criminal financial flows through a cryptocurrency mixer. It later became known that Alexey Pertsev, the developer of the service, was involved.

On 22 August, a rally was held in support of him in Amsterdam. Participants said that open source is not a crime and that the authorities should prosecute the real attackers.

The CEO of cryptocurrency exchange Kraken, Jess Powell, called the sanctions against Tornado Cash unconstitutional, while TRM Labs analysts called it a challenge to compliance. Pertsev was also supported by Cardano founder Charles Hoskinson.

Recall that on August 24, it became known that a court in the Netherlands has remanded Pertsev in custody and set a 90-day deadline for the first hearing in his case to take place.

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