Blockchain community reaction to the Tornado Cash ban
To say that the events surrounding the Tornado Cash transaction-mixing service are critical to the cryptocurrency industry is to say nothing: it could be the biggest challenge to the basic foundations of cryptocurrency assets.
No, of course, the world didn’t revolve around Tornado. And it’s not because it’s an excellent open-source project with many users. A holy place is never empty, and Tornado’s vacated spot on the market would have been taken by someone else very quickly.
However, the very precedent of prohibition and sanctions against the service on the pretext that cybercriminals used it looks as illogical as strange would seem to prohibit, for example, grocery store chain only because these same cybercriminals constantly restocked food and drinks supplies there.
As a reminder, on August 8, 2022, Tornado Cash, as well as all Ethereum wallet addresses associated with Tornado Cash and its smart contracts, were added by OFAC (Office of Foreign Assets Control) to the SDN special category list. Simply put, they have been banned.
In compliance with these sanctions, various payment gateways and platforms began blocking Tornado Cash. And they faced the need to ban the entire “toxic trail” of addresses ever using the service as well.
The GitHub account of Tornado Cash founder Roman Semenov, who sarcastically asked if he understood correctly that open-source code writing was now outlawed, was also blocked.
The anger of crypto investors was justified: the attempt to centralize what was once painfully decentralized would not pass. To prove this, there was a flash mob worldwide, with transactions sent from “dirty” Tornado wallets to “clean” addresses of well-known companies, funds, and influencers.
In a short time, a stream of small transactions of 0.1 ETH began pouring into large wallets, automatically “infecting” them with the sanction virus. There were names of Justin Sun of Tron Foundation, Brian Armstrong of Coinbase, Ben Horowitz of a16z, and many others. According to the sanctions rules, the addresses of these respected market participants should now also fall under the ban – after all, they formally interacted with Tornado Cash. Otherwise, OFAC will fall into the trap of “double standards” and counter-accusations of inconsistency.
One should not think that the cryptocurrency community is solely abusing the resulting incident. For example, Ethereum’s chief figure, Vitalik Buterin, personally used the Tornado service to make secure donations to Ukraine during Russian troops’ invasion of its territory. What do you think of this kind of anonymity, OFAC?
We have also collected some quotes from other cryptocurrency market participants with their assessment of what is happening.
Lawyer Jake Chervinsky:
“Privacy is essential to human dignity, deeply rooted in our society, & enshrined in our founding documents. In just the last few years, Americans across the political spectrum have railed against government interference with the right to privacy. It's about time we protect it.”
Uniswap founder Hayden Adams:
“Privacy is critical for a functional and safe society. Arguments that privacy is only for illegal activity are absurd/dangerous and reminds me of the people that want to make encryption illegal.”
CEO of Stealthy New Venture Maya Zehavi:
“The OFAC/Tornado slippery slope: banning any on-chain private metadata cuz it could potentially harm blockchain forensic analysis. I.e. only wallets that can be hermetically survelied are kosher under OFAC crypto rules. It’s a government war on privacy, not money laundering”.
