Tether continues to support Tornado Cash addresses despite US sanctions

Three weeks after the U.S. Treasury announced a ban on crypto shuffler Tornado Cash, stablecoin issuer USDT is still supporting Tornado Cash-related addresses. The Washington Post was the first to report this, citing data from crypto intelligence firm Dune Analytics.

This move by Tether is different from that of Circle, the USDC issuer, which immediately blacklisted accounts linked to Tornado Cash after the sanctions. Speaking on the matter, Tether’s CTO Paolo Ardoino said that his company had not yet been contacted by U.S. authorities. He added that Tether has not received any request from law enforcement to freeze Tornado Cash transactions. Ardoino added that Tether “normally complies with requests from U.S. authorities” and considers the U.S. Treasury Department’s sanctions “part of its world-class compliance program“.

Later, Tether published a post on their official blog stating that they are working closely with law enforcement around the world to assist in investigations. Tether stated that if they receive a verified request from law enforcement to freeze a wallet address, they comply immediately. The Tether blog post further adds:

“To date, OFAC has not indicated that a stablecoin issuer is expected to freeze secondary market addresses that are published on OFAC’s SDN list or that are operated by individuals and entities that have been sanctioned by OFAC. Moreover, no U.S. law enforcement or regulatory agency has made such a request, despite our almost daily contact with U.S. law enforcement agencies whose requests always provide specific details.”

Tornado Cash sanctions

The sanctions against Tornado Cash have caused quite a stir in the crypto community. The basic goal behind the creation of this crypto blender was to provide financial privacy to its users. However, law enforcement agencies in the United States believe that notorious players are using Tornado Cash for money laundering.

Justifying this decision, the issuer USDT stated that “the unilateral freezing of secondary market addresses could be a highly disruptive and imprudent move by Tether“. He also added that initiating a freeze without verified instructions from law enforcement could interfere with the ongoing investigation. Tether said that in its dealings with law enforcement, it has sometimes been specifically asked not to freeze addresses.

U.S. sanctions led to the immediate arrest of Tornado Cash developer Alexey Pertsev. However, crypto-currency advocates gathered at Dam Square in Amsterdam to protest the arrest.