Media: Tether does not block USDT related to banned crypto mixers

What’s new? Journalists from The Washington Post reported that Tether Limited (the issuer of the largest stablecoin by capitalization, USDT) does not blacklist USDT accounts associated with Tornado Cash and other cryptocurrency mixers that have been sanctioned by the US authorities. This is evidenced by the data of aggregator Dune Analytics. In addition, Tether CTO Paolo Ardoino said that the US sanctions rules do not apply to the company’s operating jurisdiction.

News on the outlet’s website

What other statements have been made? Representatives of the company stated that they are located in Hong Kong, do not operate in the United States, and do not engage US citizens as customers. Despite this, Tether Limited is under the supervision of the US Treasury because it is registered with the Financial Crimes Enforcement Network and, in theory, should consider the agency’s sanctions to comply with the global level.

The Treasury Department, however, declined to answer reporters’ questions about whether Tether violates the rules of sanctions against Tornado Cash. The company itself reported that US officials did not approach the company about this issue.

How did events develop? On August 8, the US authorities imposed sanctions against Tornado Cash, noting that more than $7 billion had been laundered through the service since its inception, including from hacks. After that, dYdX and Uniswap crypto exchanges, the Oasis.app DeFi platform and the Aave DeFi protocol began blocking users whose addresses are associated with Tornado Cash. And Circle, the issuer of the USD Coin (USDC) stablecoin, blocked more than 75 000 coins associated with the sanctioned mixer addresses.

In this regard, Rune Christensen, the co-founder of MakerDAO, suggested converting USDC from the DAI stablecoin reserve worth $3,5 billion into ETH for security purposes. VanEck crypto fund strategy advisor Gabor Gurbacs reported that investors transferred about $1 billion from USDC to USDT over the past month, most of it just after the freeze decision. On August 22, analysts at Glassnode reported that the number of USDC at the addresses of the asset’s largest holders, which are in the top 1% of holders, reached a 22-month low.

For more details on what awaits DeFi projects after the sanctions against Tornado Cash, see GetBlock Magazine’s special feature.