Key Takeaways:
- Tornado Cash is subject to US Treasury sanctions now.
- The decision has made it impossible for American investors to use the contentious service.
- These sanctions are not shocking to many people.
On Monday, the U.S. Treasury Department forbade all citizens of the country from using Tornado Cash, a decentralized cryptocurrency mixing service.
It can be said that this action demonstrates the American government’s resolve to pursue various crypto supply chain nodes that are used for nefarious purposes.
On Ethereum, Tornado Cash is a decentralized mixer protocol that allows for private transactions. Smart contracts known as “mixers” accept, pool, and combine cryptocurrency from various senders to increase privacy by obfuscating prospective audit trails.
To make it more difficult, if not impossible, to track. Its code is built to combine a user’s cryptocurrency with a pool of other Tornado Cash users’ cryptocurrency in a smart contract. According to the service’s official website, since its August 2019 launch, users have deposited more than 3.2 million ETH (roughly $3.5 billion) into the platform.
According to a post on the Treasury’s website, the protocol and a list of related smart contracts have been blocked. The US has never approved a DeFi protocol on-chain before.
Tornado Cash has been added to the list of Specially Designated Nationals maintained by the Office of Foreign Asset Control (OFAC), a Treasury regulatory body tasked with attempting to prevent sanctions infringements. This list keeps track of sanctioned individuals, organizations, and cryptocurrency addresses. Because of this, no U.S. individuals or organizations are allowed to interact with Tornado Cash or any of the Ethereum wallet addresses connected to the protocol.
One of Tornado Cash’s founders claimed in March that it was “technically impossible” to impose penalties on the contentious coin mixer.
The shocking information was also announced via Twitter by @MarioNawfal, Co-Founder & CEO at NFT Tech and Founder & CEO at International Blockchain Consulting.
The community is always disappointed but never surprised by the increased activity of regulatory bodies encroaching on the crypto space.
Netizens assert that they almost anticipated this restrictive action.
Tornado Cash’s creators contend that it is a privacy tool they have no control over, despite Vice’s recent report from June claiming that it has become the preferred service for hackers and cryptocurrency crooks.
Tornado Cash, on the other hand, was not created by felons. Founder Roman Semenov runs the cybersecurity firm PepperSec. Not only that, but the devs claim they have no oversight over the smart contracts that operate the program because they entirely disposed of their cryptographic keys, despite their efforts to comply with the US sanctions regime.
The well-known Ethereum transaction mixing technology announced last November that it was compatible with Arbitrum, a Layer 2 network.
