Tether Says It Will Not Freeze USDT in Sanctioned Tornado Cash Addresses

Stablecoin issuer Tether has revealed that it will not freeze USDT tokens in U.S.-sanctioned Tornado Cash addresses. The Hong Kong-based company noted that the USDT would only be frozen if the appropriate authorities instructed them to do so. 

In a Wednesday blog post, Tether stated that it regularly communicates and obeys specific details in the instructions of major law enforcement agencies in several countries, including the US.  As such, if U.S. authorities had wanted the stablecoins in the sanctioned Tornado Cash addresses frozen, they would have given specific instructions pertaining to it. 

“Tether normally complies with requests from US authorities…(We) have not been contacted by US officials or law enforcement with a request to freeze the addresses sanctioned by OFAC…despite our near-daily contact with US law enforcement whose requests always provide precise details,” the company said. 

A Reckless Move

Tether further noted that freezing the USDT in sanctioned Tornado Cash addresses could end up being a reckless move on its part. According to the company, if the concerned addresses are undergoing investigations, freezing the funds in them without verified instructions from the appropriate law enforcement agencies could disrupt the investigations.

The USDT issuer stated that such a move could “alert suspects of the investigation, cause liquidation or abandonment of funds, and jeopardize further connections.” 

Tether also noted that it “has been cooperating on various freezes with US law enforcement.” The firm believes that if governmental agencies want the sanctioned Tornado Cash addresses frozen, they would follow the same process of “detailed communication and coordination,” which is to specifically tell them to go ahead and freeze the addresses holding the funds.

OFAC Sanctions Tornado Cash

Earlier this month, the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury banned the use of crypto mixer Tornado Cash in the country, adding protocol’s smart contract addresses to its sanction list. 

The action by the governmental agency was taken due to the alarming rate at which Tornado Cash helps malicious actors in the crypto industry launder their funds. Individuals and entities such as crypto exchanges in the U.S. are mandated to report any crypto address that interacts with the sanctioned Tornado Cash addresses.