After freezing $75,000 in USDC belonging to users of Tornado Cash, Circle the issuer of the stablecoin says it has complied with the sanctions and blocked addresses on its platform. It has cut off USDC access from Circle Accounts to and from the Tornado Cash sanctioned addresses.
The US government, on Monday, imposed a ban on the use of an open-source software protocol address that co-mingled assets from likely licit and illicit actors. This is where Tornado Cash comes in. Crypto investors use this to hide their transactions. Jeremy Allaire, Circle CEO, told users that the systems it has in place to comply with applicable law and government regulations have worked. He said Circle knows that complying with the law and helping to stop money laundering is right and their obligation as a regulated financial institution. Circle highlighted its belief that the presumption and preservation of privacy should be enshrined as a design principle in the issuance and circulation of dollar digital currencies.
The platform recognizes that tracking and tracing illicit activity through blockchain is an advancement in financial technology. Thus, maintaining compliance with sanctions laws through block lists is part of issuing a digital asset within the regulatory perimeter of the United States and other countries. Allaire pointed out that being made to use that feature to shut down all USDC access across an entirely open source protocol appears flawed.
Circle intends to challenge this flaw as a tenant of its responsibility, and the trust it has built with the ecosystem, among policymakers and regulators. It is resolute to doing what is right. Furthermore, Circle said it has collaborated with the ecosystem and seen invaluable innovation.