According to Tether, it has not been ordered to freeze Tornado addresses. Therefore, it will not be doing so.
On August 8, multiple addresses associated with the Ethereum coin mixer Tornado Cash were added to a US sanctions list.
Tether recently announced that it is working with American law enforcement on several freezes. This includes freezes connected to the recent sanctions against Tornado Cash.
Tether clarified, though, that it has not received explicit order to freeze any Tornado Cash addresses. The company stated that the Office of Foreign Asset Control (OFAC) “has not suggested that a stablecoin issuer is expected to freeze secondary market addresses” that are on its list of prohibited parties or that are associated with one.
The firm claimed that it is often communicating with the law enforcement daily. Moreover, in the event that it receives a valid request from the law enforcement, it will comply with their orders.
Tether stated it might be “highly disruptive and reckless” if it freezes an address without the authorities’ order. The firm added that it could alert the suspects, leading asset holders to sell or give up their funds, or obstruct ongoing investigations upon doing so.
Tether added that it does not freeze wallets that belong to exchanges and services, and only freezes privately-held wallets. This claim seems to refer to a common argument that Tornado Cash is the first technology to be targeted rather than a person or group.
Tether finds fault in Circle’s initial choice to blacklist Tornado Cash addresses regarding to its USDC stablecoin — believing Circle’s move to be “premature”, and warned it would hurt the law enforcement efforts. Other stablecoin issuers like Paxos and MakerDAO were mentioned as not having frozen those addresses.
