Tether Continues to Support U.S Sanctioned Tornado Cash

The company behind the number one most used stablecoin in the world is potentially violating U.S sanctions by continuing to support crypto transaction privacy mixer Tornado Cash, according to a report today from the Washington Post.

The article cites analytics from crypto intelligence firm Dune Analytics to argue that Tether has not yet blocked any wallets tied to Tornado Cash.

Tether’s Chief Technology Officer, Paolo Ardoino, said in a statement that U.S regulators have yet to reach out to Tether regarding stopping any Tornado Cash transactions.

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.”

Earlier this month, the Treasury Department sanctioned Tornado Cash, claiming that North Korean hackers and others had used the service to conceal at least $7 billion in stolen cryptocurrency. Generally, when the government sanctions individuals, countries, or companies, U.S entities comply by avoiding or stopping any business with them.

Though $7 billion was reportedly the number of funds passed through the mixer, according to blockchain data by Elliptic, just $1.5 billion could be illegally obtained.

Many within the Crypto community have called for action as they see this move by the U.S government to be an abuse of power.

CEO of crypto exchange Kraken Jesse Powell called the sanctions “unconstitutional.” Digital rights activist group the Electronic Frontier Foundation (EFF) said it was “deeply concerned,” and Crypto non-profit Coin Center stated it was “exploring a court challenge.”

The sanctions levied at Tornado Cash are unique as the tool is a piece of code that lives in a decentralized network, with the original creators coding the software in such a way that it could never be changed. As a result, many crypto firms do not know what actions to take to avoid criminal charges.

Just days after the U.S sanctioned Tornado Cash, the Netherlands’ Fiscal Information and Investigation Service (FIOD) revealed that they had arrested a “suspected” Tornado Cash developer. The arrest led to an uproar in crypto communities, as they claimed this was a blatant war on code.

In the past, Tether has had problems with law enforcement and U.S regulators as it had to pay $41 million over claims that US dollars fully backed the Tether Stablecoin (when it is not) and was investigated over alleged bank fraud committed by a former executive.

If there's any crypto firm that should not be flirting with the potential wrong side of the law its Tether.