The world’s largest stablecoin issuer, Tether, may not be complying with the U.S. Treasury Department’s sanctions against crypto transaction privacy mixer Tornado Cash, according to a report today from the Washington Post.
The publication cites analysis of data from crypto intelligence firm Dune Analytics to state that the Hong Kong-based Tether has not blacklisted any accounts associated with Tornado Cash.
Tether’s Chief Technology Officer, Paolo Ardoino, told the publication that Tether has yet to be approached by U.S. officials or law enforcement with a request to freeze transactions with Tornado Cash.
He added that Tether “normally complies with requests from U.S. authorities” and considers U.S. Treasury Department sanctions “as part of its world-class compliance program.”
A Tether spoksperson told Decrypt, “So far, OFAC has not indicated that a stablecoin issuer is expected to freeze secondary market addresses that are published on OFAC’s SDN List or that are operated by persons and entities that have been sanctioned by OFAC. Further, no US law enforcement agency or regulator has made such a request despite our near daily contact with US law enforcement whose requests always provide precise details.”
Tornado Cash reaps the whirlwind
Earlier this month, the U.S. Treasury Department announced sanctions against Tornado Cash, stating that had taken the measures because criminals had used the privacy mixer “to launder more than $7 billion worth of virtual currency since its creation in 2019.”
While $7 billion is roughly the total amount of funds that have passed through the privacy tool, according to blockchain data by Elliptic, just $1.5 billion was illegally obtained.
Feds Blacklist Tornado Cash, Ban Ethereum Mixing Tool in US
The U.S. Treasury Department today sanctioned Tornado Cash, an Ethereum coin mixing tool. In a Monday announcement, the body added the Tornado Cash website and a long list of Ethereum addresses to its Specially Designated Nationals list, banning American citizens from using the tool or transacting with these addresses. Tornado Cash is an app that lets users make private transactions on the Ethereum network. It does this by pooling together cryptocurrency deposited by many users and mixing them...
Many in the U.S. and beyond have opposed the sanctions. Digital rights activist group the Electronic Frontier Foundation (EFF) said it was “deeply concerned,” while crypto policy non-profit Coin Center said it was “exploring a court challenge.”
Jesse Powell, CEO of crypto exchange Kraken, last week joined the chorus of voices calling the sanctions “unconstitutional.”
The Dutch crackdown
Five days after the U.S. announced sanctions on Tornado Cash, the Netherlands’ Fiscal Information and Investigation Service (FIOD) announced it had arrested a “suspected” Tornado Cash developer. Crypto fans and privacy advocates decried the arrest as a declaration of war on coders.
While the move may seem related to the U.S. sanctions, the FIOD stressed that it has been working under the direction of the Dutch Prosecutor's Office, but has not coordinated with the U.S. government and did not make the arrest due to the Treasury’s blacklisting of the mixer.
Dutch Police Arrest Alleged Tornado Cash Dev, More Arrests 'Not Ruled Out': Financial Crimes Unit
The Netherlands Crime Agency (FIOD) today announced it had arrested a “suspected developer” of Tornado Cash, the Ethereum-centric mixing service sanctioned by the U.S. Treasury earlier this week. “On Wednesday 10 August, the FIOD arrested a 29-year-old man in Amsterdam. He is suspected of involvement in concealing criminal financial flows and facilitating money laundering through the mixing of cryptocurrencies through the decentralized Ethereum mixing service Tornado Cash,” the agency said in a...
The non-profit DeFi Education Fund reached out to the FIOD with questions about the arrest. The enforcement agency declined to verify whether the accused is 29-year-old Alexey Pertsev, but said that coding "may be punishable" if a developer writes code “for the sole purpose of committing criminal acts.”
