Dune Analytics: so far, Tether is not blocking Tornado Cash accounts, potentially violating US Treasury sanctions; Tether says it has not received a request
The decision by Tether, the issuer of the world's largest stablecoin, signals broader industry resistance to the Treasury Department's sanctioning of Tornado Cash
Context & Ripple Effects
When the US Treasury sanctioned Tornado Cash and 44 associated wallets in August 2022, the open question was whether stablecoin issuers would actually enforce the blacklist. Dune Analytics' on-chain data suggests Tether — issuer of the largest stablecoin — has not blocked the sanctioned accounts, with Tether responding that it never received a request to do so. The gap between the Treasury's action and Tether's inaction is the first real test of whether crypto sanctions are self-executing.
The arc since then runs through Tether's own compliance history: in late 2023 its new CEO froze wallets of OFAC-sanctioned people as one of his first significant moves, by late 2024 federal prosecutors were investigating Tether over possible sanctions and AML violations, and in 2025 the Treasury removed Tornado Cash from its blacklist after a federal appeals court ruled against the sanctions. This 2022 standoff is the origin point of that whole compliance fight.
First-order effects
- Tether's USDT remains usable by Tornado Cash-linked addresses, meaning the Treasury's sanctions against 44 wallets are not being enforced on the largest stablecoin unless the Treasury formally asks — and Tether says it has not been asked.
Second-order effects
- The enforcement gap pressures the Treasury to issue explicit blocking demands to stablecoin issuers, and gives rival issuers a choice between matching Tether's hands-off posture or differentiating on compliance.
Third-order effects
- The episode frames the structural question of whether sanctions compliance in crypto depends on issuers' voluntary cooperation or explicit legal orders — a question Tether's later freezes, the prosecutor probe, and the eventual court-driven delisting all answered in stages.
The trend: Crypto sanctions enforcement is shifting from issuers' voluntary interpretation of Treasury actions toward explicit legal demands and court-tested limits, with Tether as the recurring test case.