U.S. dollar stablecoin issuer Tether had stated that it would not freeze smart contract addresses sanctioned by the U.S. Office of Foreign Assets Control’s Specially Designated Nationals and Blocked Persons list for cryptocurrency trail-mixer Tornado Cash.
Tether explained that unilaterally freezing wallet or smart contract addresses could be a “highly disruptive” and “reckless” move. “It could alert suspects of an impending law enforcement investigation, cause liquidations or abandonment of funds and expose further evidence gathering.
All U.S. persons and entities are barred from interacting with the digital currency mixer’s USDC and Ethereum smart contract addresses on the SDN list, subject to stiff criminal penalties for violation. However, Tether is a Hong Kong-based issuer and neither onboards U.S. persons as customers nor conducts business in the United States, although it voluntarily follows certain U.S. regulations as a part of compliance.
Tether also expressed reservations regarding USD Coin issuer Circle’s decision to unilaterally freeze Tornado Cash smart contract addresses earlier this month. The firm points out that other stablecoin issuers based in the U.S., such as Paxos and Dai, did not freeze any Tornado Cash wallets.
