Tether decides not to freeze addresses linked to Tornado Cash

Tether Limited, issuer of the USDT stablecoin, has stated that for now it will not block addresses that have had any interaction with the Tornado Cash mixer. According to the company, its representatives are in contact with US authorities and have made this decision.

According to a statement sent by Tether to Cryptheory, the United States Financial Asset Control Agency (OFAC) does not oblige stablecoin issuers to block addresses. Therefore, Tether decided not to do the same as other exchanges and protocols.

Tether wants to avoid counterproductive measures

The company said it is in daily contact with OFAC, but its representatives have not demanded the blockade, as have no other US regulators. Therefore, Tether has chosen to act prudently and make its decisions as the investigations against Tornado Cash progress.

“The unilateral freeze of addresses on the secondary market could be a highly disruptive and reckless move on the part of Tether. Even if Tether recognizes suspicious activity at such an address, completing a freeze without verified instruction from legal authorities and other government bodies could interfere with ongoing investigations,” the company said.

In this sense, the freezing of addresses would even result in the blocking of possible criminals, but could put them on alert. After all, criminals would realize that they are under the eyes of the authorities and could flee or migrate to other services.

Another issue is that in many cases, companies are oriented to do just the opposite. That is, to let criminals act freely with their addresses. As the blockchain is public, this “freedom” gives agents a sense of impunity, which makes them more prone to making mistakes.

However, Tether said it may change its decision if OFAC or other security agencies request address blocking. The company also stated that it considers OFAC sanctions to be part of its world-class compliance program.

Tornado Cash Sanctions

As Cryptheory reported, the US Treasury Department ordered a ban on Tornado Cash in early August. The measure made it illegal for any US citizen or company operating in the country to use or interact with the mixer.

Tornado Cash is a service that scrambles cryptocurrency transactions, making it difficult to trace the origin of transactions. These mixers rose to fame after hackers began using them to hide stolen funds in attacks, such as the $625 million stolen in the March Ronin attack.

However, many people also use Tornado Cash to escape punishment – ​​in countries where cryptocurrencies are banned, for example – or simply to preserve their anonymity. But the sanctions imposed by the US also affect these people, who will no longer be able to use the service.

Since then, several companies and even decentralized protocols have blocked addresses that interacted in any way with Tornado Cash. Circle, a competitor to Tether and issuer of the USDC stablecoin, has also blocked funds linked to the mixer.