The source of the confusion is the Tornado Cash funds anonymization process. With the site down and the monies frozen, the American government is now looking into the service. The Ethereum creator was eager to respond to this information!
The advantages of Tornado Cash, in Vitalik’s opinion
When the protocol’s fines were tallied, Vitalik Buterin felt compelled to respond in a tweet. He claims that Tornado Cash is more than just a tool used by hackers to steal money from blockchain accounts. This approach does in fact also have a positive purpose, as it so beautifully demonstrates.
On this note, curious if there are documented examples of TC having been used for this. Obviously self-identifying sort of defeats the point but e.g. groups or guides recommending people to do so?
— Jeff Coleman | Jeff.eth (@technocrypto) August 9, 2022
Particularly, the creator of Ethereum admits that he recently donated to Ukraine using Tornado Cash. He emphasizes that his actions are far from illegal and that the protocol itself is not accountable for how it is used.
As we noted yesterday, Tornado Cash has been at the center of recent cryptocurrency news. The term “crypto mixer” refers to this protocol. It enables users to make their transactions anonymous. Because of this, on August 8th, the US Treasury Department added Tornado Cash to its list of “Speciality Designated Nationals.” This list consists of several individuals or businesses that have been subject to economic sanctions. The protocol engages in numerous illicit actions, including money laundering, for the US Treasury. Finally, it declares:
- Tornado Group has been used to launder over $7 billion in digital assets since its inception in 2019.
It’s difficult to hold it against him when we consider, for instance, the recent Harmony hack that cost $100 million. Additionally, the business is charged with assisting the North Korean cyber collective Lazarus Group to conceal more than $455 million in stolen money.
Several industry actors, including Circle, the business that issues USDC, took up the protocol yesterday. The latter prohibits addresses from using the protocol. Similar to this, Tornado Cash has been blocked by Ethereum, Infura, and Alchemy blockchain node infrastructure providers. These services appear to be compliant with the US Treasury’s viewpoint because they are necessary for accessing the Ethereum blockchain. A decision that some proponents of decentralization have challenged because it is impossible to have a protocol without a reliable third party and is therefore “permissionless” in these circumstances.
It's happening.@infura_io and @AlchemyPlatform are now blocking RPC requests to @TornadoCash
— ノーネーム (@0xdev0) August 9, 2022
Centralized RPC services are one of the cancers that undermine the core benefits of crypto.
As long as they dominate the market, no protocol is truly permissionless. pic.twitter.com/3TI3QmDgmD
Along with many other protocol sites being restricted, Tornado Cash co-founder Roman Semenov’s Github account has also been stopped.
Here's the list of Tornado Cash resources that were banned
— 🌪️ Tornado.cash 🌪️ (@TornadoCash) August 9, 2022
- Tornado Cash @GitHub organization
- personal @GitHub accounts of TC contributors
- all $USDC on Tornado Cash contracts @circlepay
- @infura_io RPC
- @AlchemyPlatform RPC
- https://t.co/SHvgEjTOMV domain @eth_limo
Tornado Cash sparks a lot of discussions!
Jerry Brito, the executive director of Coin Center, a non-profit working on political issues relating to the cryptocurrency business, draws attention to the initial debate rekindled by this case. He emphasized one of the issues that Tornado-like protocols encounter. It is true that this tool has a neutral character, allowing for both positive and bad uses.
This is a topic that has been frequently discussed throughout history and is inherent to all forms of technology, especially recently with the rise of the internet and the limitless opportunities it provides. According to him, we are criticizing the tool but not the hackers themselves.
The second argument, which is about decentralization, lies at the core of the cryptocurrency sector. The blockchain was created to combat the omnipresence of centralized players and the power that accrues to a small number of actors as a result of this centralization. The blockchain is decentralized by nature. Attorney and chief policy officer for the Blockchain Association Jake Chervinsky summarizes this idea as follows:
- While the association supports the US Treasury’s mission to combat illicit activity in cryptos, they are also concerned that the blender ban crosses a line that the government has always toed and should continue to uphold as what a good policy. This decision to sanction a decentralized protocol threatens this intelligent and balanced approach to cryptos previously championed.
This instance, as well as the ongoing discussions over crypto-currencies like Monero, put the usage of these tools—which are by nature neutral but which many hackers can utilize, as we constantly observe—at the center of the arguments. Furthermore, even if we can never truly forbid a decentralized protocol, we can see that there are various ways to obstruct it and stop it from being used.
As a result, we once again witness an intellectual conflict between supporters of decentralization and complete freedom and those who want a more practical approach to regulation that dissociates itself from blockchain ideas. In the eyes of the authorities, Tornado Cash won’t be the last procedure of its kind, and the outcomes of this incident will be closely watched.
