Tether, the most extensively used stablecoin, has been a leader in the development of the idea for digital tokens. Tether Tokens are a trailblazer in the digital use of conventional currencies and a disruptor of the established financial system. The token has also been supporting and empowering new blockchain initiatives and innovations in the crypto-verse.
While being one of the most dynamic tokens, Tether seems to have taken a stand on the most recent Tornado cash issue. The token indicates that it is deciding whether or not to freeze Tornado cash addresses after waiting for directions from the law enforcement authorities.
Alarm bells went out in the cryptocurrency market after the US government recently imposed sanctions on virtual currency mixer Tornado Cash. The Specially Designated Nationals (SDN) and Blocked Persons List of the US Treasury Department has approved the Ethereum-based coin mixer Tornado Cash. US investors are no longer permitted to use the chain of the coin-mixing service for illicit reasons due to the sanction.
The US Department of Treasury said that the action became effective on 8 August 2022. Businesses use Coin Mixers to disguise the source of every transaction, with Tornado Cash, which is based on Ethereum, further becoming incredibly popular.
Tether considers this a premature move
In a recent blog post, Tether said that the company’s choice to freeze secondary market addresses might be careless. The company further disclosed that there have been occasions in which law enforcement has instructed it to refrain from freezing suspect private wallets in order to prevent alerting the subject of an investigation and causing them to liquidate the cash. Several stablecoin issuers, including Paxos, a licenced business with headquarters in New York, are also criticised in Tether’s blog post.
The blog further stated,
“Even if Tether recognizes suspicious activities on such an address, completing a freeze without the verified instruction of law enforcement and other government agencies might interfere with ongoing and sophisticated law enforcement investigations.”
Tether claimed that despite not having a US presence, the company still views OFAC sanctions as a method for global compliance. It further stated that freezing the addresses erratically could obstruct regulators’ ability to conduct an inquiry.
Tether keeps up its promise
In other news, the leading stablecoin issuer USDT has started to reduce its holdings of commercial paper in compliance with commitments it made earlier this year.
According to a recent disclosure from the firm, the token decreased its holdings of commercial paper from $20 billion to $8.5 billion in the second quarter of 2022, a loss of more than 58%.
Tether further states that it intends to reduce its holdings of commercial paper to zero by the end of the year and to about $200 million by the end of August.