Tether Not Willing To Freeze Tornado Cash Addresses

The US government decided to impose a ban on the popular Ethereum mixer called Tornado Cash and this has become a hot topic in the crypto community.

Amidst the discussions happening around Tornado Cash, Tether Holdings, the stablecoin issuer, disclosed on Wednesday that they did not plan on freezing Tornado Cash addresses for now.

According to the company’s recent blog post, they are still waiting for orders from law enforcement and until then, the address would not be frozen.

The ban

On August 8th, the financial watchdog of the US Treasury Department, the Office of Foreign Asset Control (OFAC) imposed a ban on Tornado Cash.

The Ethereum mixing application was sanctioned by OFAC because of its use in money laundering activities, but the move has generated a great deal of controversy since then.

There was undoubtedly a ripple effect of the ban and there were a number of companies that took action after it was announced.

This included prominent names like Discord, Github, Coinbase’s Centre consortium, and Circle Financial’s.

For instance, Github suspended developers and the Discord server of Tornado Cash was also deleted. A report also noted that dozens of Ethereum addresses were also blacklisted by the Centre and 75,000 USDC were frozen.

Tether’s statement

16 days after the ban was imposed, Tether published a blog post and explained that as of now, it will not freeze USDT assets that are held in the Tornado Cash mixer.

The company detailed that it regularly works with law enforcement officials and stays in contact with key law enforcement officers on a daily basis.

Tether added that if a legitimate request is put forward by a law enforcement official for freezing a private wallet, they usually comply with it. But, it said that they do not freeze wallets of services and exchanges.

It went on to say that the OFAC had not mentioned if stablecoin issuers were also required to freeze addresses operated by entities or individuals sanctioned by OFAC or mentioned on its SDN list.

In addition, it said that they had not received such a request despite being in contact with US law enforcement, even though they usually receive precise details.

Bad move

Tether also added that unilaterally freezing secondary market addresses could turn out to be a reckless and highly disruptive move.

The company also disclosed that there have been situations where they were instructed not to freeze suspected private wallets in order to prevent alerting a suspect and allowing them to liquidate funds.

The blog post from Tether also mentioned a number of other stablecoin issuers, such as Paxos, which is based in New York.

It said that Paxos had not frozen Tornado Cash wallets and it also said that Makerdao, which issues the stablecoin DAI, had also not frozen any assets.

But, Tether was not in agreement with the move made by USDC issuers. It said that they had not waited for US authorities to give instructions, so their move to blacklist smart contracts of Tornado Cash was premature.