>>Tether has not been contacted by US officials or law enforcement with a request to freeze the addresses sanctioned by OFAC, but as noted above, Tether normally complies with requests from US authorities, being in contact with them almost on a daily basis.
Rephrased as: "US Treasury, we're ready to lock & freeze as many addresses as you need -- just give us the word!"
That's not how this work. Sanction violation is a strict liability offense - it is incumbent on companies to make sure they don't violate sanctions.
With this statement Tether is.. dumb? It's impossible for them to claim they didn't know about it.
They are domiciled in Hong Kong, but BitFienex (their sister company) recently agreed to pay $18M+ in fines to New York for finance law violations so it's not like they are beyond the reach of US law.
They're a U.S. dollar stablecoin operator. If they get hit with secondary sanctions it literally becomes illegal for a Tether to be redeemed for dollars. I have no doubt it will continue printing tape at parity, but at least the smart money will know what's going on.
Tether is already under no obligation to redeem Tethers for dollars according to their own terms and conditions [1].
They are only obligated to redeem for people they at their sole discretion deem to be 'customers,' ([1] § 3) they can then arbitrarily delay that redemption for as long as they see fit for basically any reason ([1] § 3) and they can substitute the redemption for any assets they may or may not have on hand ([1] § 3). Most assuredly at any value they deem fit. On top of that there's a final blanket ban (net of 'exceptions') for any and all US persons ([1] § 3.3).
> can then arbitrarily delay that redemption for as long as they see fit for basically any reason
If they're sanctioned, they can't redeem whether they want to or not. Holding Tether if it gets sanctioned would be like having U.S. dollar bank deposits at an Iranian bank. Yes, they may have other assets, but you can't legally accept them nor their proceeds.
> there's a final blanket ban (net of 'exceptions') for any and all US persons
This is meaningless. Tether use U.S. dollars. They're subject U.S. jurisdiction.
My point is their terms of service preclude basically anyone holding Tether from redeeming Tether in exchange for US dollars at Tether's sole discretion so even so-called good actors are being ripped off. This is by no means a substitute for OFAC compliance.
They're not actually domiciled in Hong Kong - not that it matters - but instead in the BVI. More specifically somewhere on Tortola. This of course came out in the Paradise Papers after the Bitfinex folks pretended not to have a business relationship with Tether (while of course they shared the same parent entity). Bitfinex btw is also registered in the Virgin Islands. Both Tether and Bitfinex are owed by iFinex which is Hong Kong registered.
And for good measure they 'bank' with Deltec bank in the Bahamas whose head, Jean Chalopin, is the creator of Inspector Gadget.
Either way they are very definitely not outside the reach of the long arm of Uncle Sam. The wheels of justice grind slow but they grind exceedingly fine.
I am ignorant, but do they expect government to contact them? I assumed sanctions are sanctions - you broadcast publish them rather than try to inform each and every entity specifically. So this feels like either incompetent ignorance, Or wilful pretence ignorance.
They already do, it's the OFAC SDN list. [1] Everyone in the money transmission business is not just free to leverage this list but required by law to. If you search for 'tornado' in the plain text version, you'll find the list of blacklisted addresses.
This is nothing compared to China-level internet censorship, but barring Americans from interacting with a decentralized protocol that a contract address on the SDN list resolves to, is censorship.
And the restrictions will have to massively escalate, possibly to CCP-levels (with restrictions on end-user access strong encryption) to effectively enforce such prohibitions, as cryptocurrency becomes more ubiquitous.
Yes, the quote was originally Linus Torvalds saying "If Microsoft ever builds applications for Linux then I've won". Can't find a direct source from when he said it but that's what the joke was referencing.
I mean.. that is basically how ALL entities ( and individuals ) in US are expected to behave. Now, Tether as an entity is based in Hong Kong, but, as one theory goes, the moment it touches US dollar it is in OFAC's scope. And tether does do just that.
Not to search very far, more recent SDN update had a whole bunch addresses to be blocked. I am all but certain none of the US based entities even thought of not complying.
Rephrased as: "US Treasury, we're ready to lock & freeze as many addresses as you need -- just give us the word!"