US Treasury

Coin Center Sues US Treasury Over Tornado Cash Ban — Lawsuit Says Government’s Action ‘Was Unlawful’

October 12, 2022 Bitcoin.com

Top US Regulators Urge Congress to Pass Legislation on Crypto Assets

October 5, 2022 Bitcoin.com

3 reasons why USDC stablecoin dropping below $50B market cap is Tether’s gain

September 26, 2022 Coin Telegraph

<div>3 reasons why USDC stablecoin dropping below B market cap is Tether's gain</div>

Binance

The stablecoin's top-rival Tether has witnessed growth in its market cap, on the other hand.

The market capitalization of USD Coin (USDC), a stablecoin issued by U.S.-based payment tech firm Circle, has dropped below $50 billion for the first time since January 2022.

On the weekly chart, USDC's market cap, which reflects the number of U.S. dollar-backed tokens in circulation, fell to $49.39 billion on Sep. 26, down almost 12% from its record high of $55.88 billion, established merely three months ago.

*USDC versus USDT weekly* *market cap* *chart. Source: TradingView*

In contrast, the market cap of Tether (USDT), which risked losing its top stablecoin position to USDC in May, crossed above $68 billion on Sep. 26, albeit still down 17.4% from its record high of $82.33 billion in May 2022.

The divergence between USDT and USDC shows investors' renewed preference for the former. Let's take a look at the factors boosting Tether as the top stablecoin.

Binance's USDC suspension

Binance, the world's largest cryptocurrency exchange by volume, announced earlier in September that it would convert its users' USDC balances for its own stablecoin, Binance USD (BUSD). The conversion will commence on Sep. 29 and does not apply to USDT.

The exchange said it wants to "enhance liquidity and capital-efficiency for users" via what appears to be a forced conversion in an increasingly competitive stablecoin sector. As a result, Binance suspended spot, future and margin trading in USDC.

8/ 1. Binance's forced "Auto-conversion" is blatantly monopolistic behavior of a typical FinTech company

They are no better than traditional banks that have the power to freeze or take control of user funds

Where is the decentralized future that #Web3 users were promised?
— Momentum 6 (@Momentum_6) September 21, 2022

USDC's market cap has plunged by $9.5 billion since the announcement.

Following Binance's footsteps, the India-based cryptocurrency exchange also stopped deposits of USDC beginning Sep. 26.

Whales ditch USDC after Terra fiasco

The USDC supply help by top 1% addresses (aka whales) has dropped to 88.36% in September from its year-to-date high of 93.84% in February, according to data collected by Glassnode.

*USDC supply held by top 1% addresses. Source: Glassnode*

Interestingly, the plunge accelerated after Terra, a $40-billion "algorithmic stablecoin" project, collapsed in May, stirring a negative sentiment toward the entire stablecoin industry.

For instance, the total market cap of all stablecoins saw the worst correction in 2022, dropping from a February high of $97.37 billion to $80.65 billion in September, according to CryptoQuant.

*All stablecoins' circulating supply. Source: CryptQuant*

Tornado Cash sanctions

The USDC market cap plunge has also accelerated after the U.S. Treasury imposed sanctions on crypto mixing service Tornado Cash over money laundering concerns.

Circle responded to the sanctions by freezing all USDC wallets owned by Tornado Cash. The firm also prevented addresses that may be associated with the banned mixing service from using USDC. In contrast, Tether avoided blacklisting Tornado Cash addresses.

Independent market analyst Geralt Davidson treated Circle's response to the Tornado Cash sanction as a cue that holding USDC is riskier compared to its stablecoin rivals.

"People now have realized there is more risk holding USDC, Circle blacklisted all the USDC on Tornado Cash addresses sanctioned by US Treasury," he noted in August 2022, adding:

USDC seems like the only token being blacklisted, while other ERC-20 tokens were not.

Davidson also treated Tornado Cash as one of the reasons why USDC whales have been dumping the stablecoin in recent months.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Github Partially Reinstates Tornado Cash Codebase, Open Source Code Set to Read-Only Mode

September 23, 2022 Bitcoin.com

Tornado Cash left a void, time will tell what fills it — Chainalysis chief scientist

September 22, 2022 Coin Telegraph

afp

There’s a hole to be filled where Tornado Cash once was, and “junior mixers” are vying for position in the wake of the mixers sanction and ban by the U.S. Treasury.

The sanctions on cryptocurrency mixer Tornado Cash has left a vacuum for illicit fund mixing services, but more time is needed before we’ll know the full impact, according to Chainalysis’ chief scientist.

During a demo of Chainalysis’ recently launched blockchain analysis platform Storyline, Cointelegraph asked Chainalysis chief scientist Jacon Illum and country manager for Australia and New Zealand Todd Lenfield about the impact of the Tornado Cash ban.

Illum said whilst there is still some usage of the mixer, more time was needed to “see what's happening” and how the ”world responds to that designation,” adding that people are trying to figure out what to do now the crypto mixer is effectively gone:

“People are getting more cautious in the space and are not sure how to interact with Tornado Cash, we've seen deposits into services providing similar activity go down at least temporarily, because people are measuring like ‘what does this mean for me?’”

But, where others see obstacles, some are clearly seeing opportunity, Illum noted a crop of what he calls “junior mixers” have popped up looking to cash in on the void that Tornado Cash left.

An August report by blockchain security firm SlowMist stated 74.6% of stolen funds on the Ethereum (ETH) network were transferred to Tornado Cash in the first half of 2022, a sum of over 300,000 ETH, around $380 million.

Data from Chainalysis showed the 30-day moving average of the total daily value received by crypto mixers reached a new all-time high of $51.8 million in April.

“If the liquidity isn't there, you effectively dry up a lot of [a mixers] capability,” Lenfield added.

“The hunting for places where there is liquidity, when it's highly visible after things like the OFAC sanctioning of Tornado Cash, I think makes a very interesting space to keep an eye on.”

Tornado cash was sanctioned by the United States Treasury Department on Aug. 8 meaning criminal or civil penalties could be brought against U.S. citizens or entities who interact with the mixer. Over 40 cryptocurrency addresses purportedly connected to Tornado Cash were added to the Specially Designated Nationals list of the Office of Foreign Asset Control (OFAC).

Asked about the level of sophistication that law enforcement agencies had in dealing with crypto related crime, Illum mentioned one of the biggest gaps in law enforcement at the moment is blockchain-related training.

“As [blockchain] gains adoption, there's more people that are getting exposure to crypto, which also means that there are more agents or law enforcement personnel that need to have exposure to crypto as well.”

Lenfield noted that authorities are starting to build capabilities around cryptocurrencies, citing the Australian Federal Police’s (AFP) recent establishment of a cryptocurrency unit focused on monitoring crypto transactions.

“It is active in their minds, they are setting goals, and they're working through that…but as in any aspect, there's that learning curve to get them there, but there is 100% visibility and development in this space by those agencies.”

Earlier in September, Chainalysis Crypto Incident Response team helped law enforcement recover $30 million in crypto stolen in the Ronin Bridge hack by the North Korean linked Lazarus Group who used Tornado Cash to launder stolen assets.

Coin Center Sues US Treasury Over Tornado Cash Ban — Lawsuit Says Government’s Action ‘Was Unlawful’

Top US Regulators Urge Congress to Pass Legislation on Crypto Assets

3 reasons why USDC stablecoin dropping below $50B market cap is Tether’s gain

Github Partially Reinstates Tornado Cash Codebase, Open Source Code Set to Read-Only Mode

Tornado Cash left a void, time will tell what fills it — Chainalysis chief scientist

US Treasury Seeks Public Comments on Crypto-Related Illicit Finance and National Security Risks

US Treasury Clarifies How to Comply With Regulations on Sanctioned Crypto Mixing Service Tornado Cash

Coin Center Says OFAC’s Tornado Cash Ban ‘Exceeds Statutory Authority,’ Plans to ‘Engage’ With US Watchdog

Dutch Law Enforcement Arrests Suspected Tornado Cash Developer in Amsterdam

Share this video