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Tether not blacklisting Tornado Cash, says media report

By Monte Stewart


Updated

Photo of coiins
The company behind the Tether coin is defying US sanctions against crypto mixer Tornado Cash, says a report. - Photo: Shutterstock

Cryptocurrency company Tether is violating US Treasury Department sanctions by not blacklisting Tornado Cash, says a media report.

The Washington Post reported Wednesday that Tether, the backer of the USDT stablecoin, is not adhering to sanctions imposed on Tornado Cash (TORN), a crypto mixer, earlier this month. The Post published its report after analyzing data from crypto-intelligence firm Dune Analytics.

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USDT to USD

Mixer shields owner’s identities

A crypto mixer pools digital assets to shield their owners’s identities. While mixers are often used for legitimate privacy protection, they have also been used for illicit purposes.

USDT is the world’s largest stablecoin. Since the coins are underpinned by the US dollar, they are supposedly more stable than altcoins, which have no underlying financial reserves.

Treasury alleged that Tornado Cash allowed North Korean state-backed hackers and other illicit groups to launder billions of dollars. According to Treasury, Tornado Cash was used to launder more than $7bn (£5.92bn) worth of virtual currency since the company’s inception in 2019.

Most companies quickly complied with the sanctions. But Jeremy Allaire, CEO of Circle, the blockchain operator that backs the USDC stablecoin, said that Treasury crossed a line by trying to block or limit open-source software.

Other crypto companies have also criticized Treasury’s move.

ATOM to USD

Code impossible to edit

According to the Post, the creators of Tornado Cash’s code made it impossible to edit. Treasury has not taken any disciplinary action.

“Tether has not been contacted by US officials or law enforcement with a request” to freeze transactions with Tornado Cash, Tether’s chief technology officer, Paolo Ardoino, said in a statement to the Post.

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Short position overnight fee 0.0137%
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Spread 6.00

Ardoino added that the company “normally complies with requests from US authorities.” But he told the Post that, as a Hong Kong-based company, Tether is not required to honour the sanctions against Tornado Cash.

But he said that Tether considers Treasury sanctions “as part of its world-class compliance program.”

CHZ to USD

Dangerous ground

A former senior official with the regulator’s Office of Foreign Assets Control (OFAC) told the Post that Tether is “treading on dangerous ground.”

“It’s never a very good idea to test OFAC.,” said the former official who was granted anonymity. “Right now, it’s a particularly bad time for any crypto-related company to do that. It looks like that’s what they’re doing.”

 

Popular money-laundering tool

Blockchain analytics firm TRM Labs said in an 8 August blog post that Tornado Cash is a favourite money-laundering tool of North Korean cybercriminals.

According to TRM, they have used Tornado Cash to launder stolen funds in 10 of their most recent crypto heists at an estimated value of nearly $1bn, including in the $620m Ronin Bridge hack.

 

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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