Tether, the company behind the world’s most used stablecoin, USDT, has frozen the wallets of individuals sanctioned by the US Office of Foreign Asset Controls (OFAC), per an announcement.
In brief
- Tether has frozen its coins held in crypto wallets sanctioned by the U.S. Office of Foreign Asset Controls, the company announced today.
- The move marks a shift away from Tether’s previous approach characterised by a reluctance towards requests for financial censorship.
In the announcement, Tether framed the move as a voluntary step to “proactively prevent any potential misuse of Tether tokens and enhance security measures,” and clarified that wallets on the OFAC list would be frozen along with any new wallets that are added in the future.
This appears to be a first significant move made by CEO Paolo Ardoino, the firm’s former CTO, who took the lead this month. Ardoino praised the policy as “expanding our close working relationship with global law enforcement and regulators” in the press release.
While Tether has frozen funds in regards to unlawful activity in the past, the company had been reluctant to freeze wallets that interacted with the sanctioned protocol Tornado Cash, saying that it did not receive a request from law enforcement. Following today’s announcement, blockchain records on etherscan show Tether blacklisted Tornado Cash’s contract addresses.
As Chris Blec noted on X (formerly Twitter), Tether “can freeze ANY wallet/account – even entire DAOs, protocols, AMMs, etc.”
Blec cautioned users who might brush off the idea to think twice.
If your response is “aw well they’d NEVER do that”, then you are vastly underestimating the power of govt to scare ppl into screwing things up.
The development means that USDT is susceptible to calls for financial censorship, for better or for worse. Users that might be concerned with the development might choose to opt out of USD Tether by using uncensorable Layer one (L1) money protocols such as Litecoin, which also boasts low fees compared to Bitcoin.
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