USDT Market Cap Increased By $2 Billion After Tornado Cash Disaster
The market capitalization of Tether (USDT) tokens has increased by nearly $2 billion since the US Treasury imposed sanctions on crypto-mixer Tornado Cash.
OFAC essentially banned Americans from using Tornado Cash on August 8, placing $44 (USDC) and Ether (ETH) addresses connected to the service with a list of specially designated citizens and blocked persons (SDNs).
OFAC claims that Tornado Cash has been used by individuals and criminal organizations to launder more than $7 billion in cryptocurrency since 2019. It is also believed that funds linked to North Korean hackers Lazarus Group were mixed through Tornado Cash.
Circle, the issuer of the USDC stablecoin, went so far as to freeze assets linked to 44 addresses marked by OFAC. Circle’s move was justified, given the potential ramifications of continuing to interact with the titles.
Penalties for non-compliance range from fines of $50,000 to $10,000,000 and imprisonment from 10 to 30 years. Circle has frozen 75,000 USDC of funds linked to the accounts in question in an effort to be fully compliant with the Treasury’s decision.
Interestingly, the market capitalization of USDC has fallen by about $2 billion from a high of about $55 billion over the past month to its current value of about $53 billion. The decline of the USDC was noted by many participants in the cryptocurrency market on social media, with a correlation between the decline in the market capitalization of the USDC and the increase in the capitalization of the USDT.
One Twitter user suggested that users transferred approximately $1.6 billion USDC to USDT following the Tornado Cash sanctions:
– The London Crypto™️ (TheLondonCrypto) August 16, 2022
Paolo Ardoino, chief technology officer of Tether and crypto exchange Bitfinex, also sparked a USDC-USDT “flip” on Twitter. Both USDC and USDT have the ability to freeze funds through the Ethereum smart contract functionality – however the former was the only issuer to announce an asset freeze on blacklisted addresses.
Why is no one talking about it? pic.twitter.com/SEAChZZeLO
– Paoloardoino August 14, 2022
Cointelegraph has contacted Tether to confirm whether it intends or expects to freeze USDT through blacklisted addresses linked to Tornado Cash.
Circle and Tether have also calmed the broader crypto community that both stablecoin platforms will support the upcoming integration of Ethereum into the Proof of Stake Beacon Chain, which is scheduled to take place in September.