Circle claims that freezing wallets violated its values about an open internet
After blocking all ETH addresses affected by the US Treasury Department’s action against Tornado Cash, USDC stablecoin issuer Circle issued a statement to clarify its stance.
Circle was required to activate a “blacklist feature” to freeze the blacklisted accounts in order to comply with regulatory obligations following the suspension. As a result, all USDC funds in wallets cannot be transferred on-chain indefinitely.
Circle, on the other hand, stated that enabling the “blacklist function” goes against the ethos of an open internet. It explained that the action was necessary because complying with existing law to prevent money laundering is both a right and an obligation.
Circle views the compromise as a cost that digital issuers must pay in order to comply with existing US laws.
“Maintaining compliance with sanctions laws through block lists is a reality of issuing a digital asset within the regulatory perimeter of the U.S. and other countries.”