Coin News

Tether may be in violation of US sanctions on Tornado Cash

24 Aug, 20223 min readAltcoins
Tether may be in violation of US sanctions on Tornado Cash

Tether, the world’s largest stablecoin by market cap, may be in violation of U.S. Treasury sanctions on Tornado Cash, according to the Washington Post.

Tornado Cash falls foul of the U.S. Treasury

On August 8, the U.S. Treasury Office of Foreign Assets Control (OFAC) added crypto mixer Tornado Cash to its list of sanctioned entities.

The agency alleged Tornado Cash had enabled North Korean hackers and other criminal enterprises to launder billions in cryptocurrencies obtained through nefarious means.

Complying with the sanctions, multiple U.S. firms moved to cut ties with the mixer. Including Circle, which blacklisted USDC accounts belonging to the organization, and Github, which removed developer access to its platform.

The fallout from the sanctions has brought to light the role of regulators in deciding public policy, particularly as it pertains to privacy and personal freedoms. More so, considering Tornado Cash is simply software.

In a broader context, as a result of the sanctions, crypto companies have expressed confusion on how to stay compliant with the law.

According to an analysis conducted by the Washington Post, Tether has not followed Circle’s lead in blacklisting USDT accounts associated with Tornado Cash.

Tether says U.S. sanction rules do not apply in its operating jurisdiction

There has been no response from U.S. government officials on the matter. Tether’s CTO, Paolo Ardoino, confirmed the company “has not been contacted by U.S. officials or law enforcement with a request.”

He added that it’s unclear whether Tether, as a Hong Kong-based company, is required to comply with U.S. Treasury sanction rules. However, Ardoino has interpreted this, along with Tether not “onboard[ing] U.S. persons as customers,” to mean the company is not obligated to conform to U.S. sanctions rules.

Former government attorney, now with the Brookings Institute, Scott Anderson, commented that sanction restrictions apply to U.S. nationals, companies, and entities conducting business within the U.S.

However, he remains unsure whether Tether is currently flouting the rules by its present stance on the matter. Nonetheless, Anderson warned that Tether may be at “legal risk” for noncompliance.

“I don’t know whether Tether falls within that scope or not. But if there is a chance that they (or their employees) might, noncompliance could carry real legal risk.”

Samuel is a strong believer in individual autonomy and personal freedom. He is a relative newcomer to the world of cryptocurrency, having first bought Bitcoin in early 2017, but keen to make up for the lost time.

Source

Subscribe to get our top stories

Coin News
App StoreApp Store