If there’s one lesson crypto firms should have learned from this year so far — just eight months that vaporized some $2 trillion in value — it’s that the continued existence of the world does not depend on their presence. It has not always been so. Last year, the US Treasury issued a report on a specific subset of the crypto world known as stablecoins (which are meant to stay at a fixed value, like $1) and the possibility that its collapse could trigger a Lehman Brothers-style economic implosion. Such a report gave the impression that some of these companies, especially the one that issued Tether, the world’s largest stablecoin, were essentially too big to fail. But since then, some of the biggest stablecoins, pseudo-banks, and hedge funds have crumbled under their own weight since April, and while that specific industry is depressed, that’s exactly zero percent of why the world economy began to slow down. (The United States, which accounted for about a third of all crypto holdings, continues to do well.)
So what’s going on right now between Treasury and Tether is a little weird. Over the past year, the federal department has beefed up its regulation of cryptocurrencies and recently blacklisted a company called Tornado Cash that dives deep into the financial crazy zones by anonymizing crypto transactions – a tool that would have been used by North Korean hackers to launder approximately $500. million in stolen cryptocurrency. Tether has not been accused of doing anything wrong. However, since the Treasury objected to the anonymization service, Tether has gone ahead and continued to allow crypto wallets that are otherwise non-grata. use digital tokens.
By the washington Job:
A Crypto Firm That Attracted meticulous examination on our side regulators and law enforcement in the past, Tether, may be in violation of new Treasury rules. According to a Washington Post analysis of data from Dune Analytics, a cryptographic intelligence firm, Tether does not blacklist accounts associated with Tornado Cash.
So far, the US government has done nothing. “Tether has not been contacted by U.S. officials or law enforcement with a request” to freeze transactions with Tornado Cash, Tether Chief Technology Officer Paolo Ardoino said in a statement, adding that the company is “normally complying with requests from US authorities”.
Chutzpah is the word that comes to mind. Sanctions are a tool of economic isolation, a means of crushing a company or a country by depriving it of financial resources. They are also public. Anyone with an internet connection can see What are the sanctions. To say, basically, “Yeah, well, the government hasn’t specifically gone out of its way to tell us whether we can do it or not” is not the normal course of business when it comes to state sponsors of terrorism. North Korea has been a surprising blind spot for the crypto industry, with former Ethereum programmer Virgil Griffith going to jail after To plead guilty help the country escape sanctions.
What’s striking about this is how Tether’s response to all of this – that the rules don’t apply – looks like a loss after a long period in which it seemed like crypto companies could do whatever they wanted. Further down the story, Tether argues that it’s actually a Hong Kong company, so it doesn’t have to listen to what the Treasury says. But that’s not how it works, especially since Tether has already been subject to US regulations and even colonized with the New York Attorney General for fraud. The reality is that if money is flowing through the US financial system, the federal government is pretty much controlling it.
There is a lot of good arguments against the sanction of Tornado Cash and other anonymization services, but these are not the arguments made by Tether. But whether Tether can really pull it off is a whole other question. Tether has lost about a quarter of its assets since peaking in November, a run that has taken the digital currency to underwear a bit of its $1 value. (It has since regained its dollar peg). At the same time, money flowed into his biggest competitor, USD Coin, which essentially does the same thing. In fact, there are all sorts of stablecoins out there that basically do the same thing, and this year’s big money squander showed that its “too big to fail” status is far from safe. The fact that he wants to throw his weight around now, and especially over North Korea, is one hell of a test of his systemic importance.