Tornado Cash has legal problems in the US
The plague of misfortune haunts the most popular stablecoin.
As reported by the Washington Post, Tether, the largest stablecoin by market capitalization, may violate sanctions imposed by the US Treasury. This is because those in charge of the project did not freeze sanctioned Tornado Cash addresses, saying they would do so if they received special instructions from law enforcement.
Tornado Cash has legal problems in the US
A cryptocurrency mixer such as Tornado Cash allows users to send cryptocurrencies to other people without revealing individual wallet addresses related to the transaction. It was placed on the list of entities covered by sanctions. American authorities looked at the activities of this project and decided to impose a number of sanctions on it. Some American companies, including Circle with its USDC stablecoin, and Github, cut off their links with the mixer in accordance with the guidelines contained in the sanctions.
According to the US Foreign Asset Control Authority (OFAC), North Korean hackers and numerous other criminals have washed away billions of dollars from dubious sources using Tornado Cash.
Tether responds to American allegations
In response to the sanctions imposed, Tether points out that other US-based stablecoin issuers, such as Paxos and Dai, for example, have not frozen any Tornado Cash wallets, while pointing out that a unilateral freezing of wallet or smart contract addresses could be "very destructive. and reckless. "
So far, representatives of the US authorities have not responded to this issue. Tether's CTO Paolo Ardoino confirmed that "US officials and financial law enforcement officials have not contacted Tether with any request on this matter."
He also added that he had some doubts as to whether Tether, as a Hong Kong-based company, is at all obligated to comply with US sanctions. Tether is a Hong Kong-based issuer and does not accept US customers as customers or do business in the US, although Tether voluntarily complies with certain US laws as part of its compliance standards.
Developer arrest
Dutch authorities arrested Tornado Cash developer Alex Pertsev on August 10 this year in connection with US government sanctions over this decentralized financial protocol. The reason for the outrage was also that the mixer is only simple software and its creators have little control over who uses it.
Steven Sidley, who is a professor at the University of Johannesburg and also head of the university's Blockchain and CryptoVerse research, said sanctions and the arrest of a developer affiliated with Tornado Cash would have "a huge chilling effect on developers worldwide" in the crypto and DeFi industries.
A former lawyer working for the US government, Scott Anderson, stated that these sanctions apply to US citizens, US companies and entities doing business in the US. He added, however, that he is not sure if Tether is breaking the law, but also warns that the company may be exposed to "legal risk" for failure to comply.
