The company behind the largest stablecoin by market cap, Tether says it will not comply with the US Treasury sanction on Tornado Cash, which means USDT holders can still use the smart contract to obfuscate their funds.
Since the announcement of the sanction, concerned companies like Circle, the stablecoin USDC issuer has reluctantly complied with the sanction by freezing coins in addresses linked to the crypto mixing tool.
Tether in response to the crypto mixer ban says it will not freeze any addresses linked to Tornado Cash as the Office of Foreign Assets Control (OFAC) lacks solid establishments that required Tether to comply with its sanction on the mixing tool.
According to Tether, it will only freeze any private wallet addresses if specifically requested by any verified law enforcement agent or agency, hitherto, none of the agents or agencies has contact with Tether to make such a request even though Tether has been in contact with relevant entities.
“Even if Tether recognizes suspicious activities on such an address, completing a freeze without the verified instruction of law enforcement and other government agencies might interfere with ongoing and sophisticated law enforcement investigations,” says Tether.
Tether also added that in some cases, the firm has been instructed by law enforcement agencies not to freeze wallet addresses that are being investigated by the agencies, this is done to prevent the suspects from being aware of the investigation during the period of the investigation.
The CTO of Tether, Paulo Arduino also noted that it is “not a US person,” nor does it onboard US persons as customers. “However, Tether does consider OFAC Sanctions as part of its world-class compliance program.”
A report by the Washington Post says that the US Treasury declined to comment on whether the USDT issuer violates the US Treasury ban on Tornado Cash.
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Other Stablecoin Response to Tornado Cash Ban
Since the ban, Circle has taken its stand by freezing private wallet addresses linked to Tornado Cash, this move is linked to the recent drop in the market cap of USDC as reports say investors are dumping USDC for its rival USDT.
According to a statement by chief executive officer Jeremy Allaire, Circle was required to obey the Treasury Department Tornado ban under the Bank Secrecy Act (BSA), Allaire furthered that “nearly all responsible registered Virtual Asset Service Providers” will be required to comply.
Hitherto, many stablecoins issuers are yet to comply, issuers in this category include; Paxos, BUSD and USDP issuer; MakerDAO, the issuer of DAI.
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