After the US Treasury accused the protocol of money laundering, the mixer is slowly disappearing from reach. What does it mean for free speech?
One of the most famous cryptocurrency mixers in the world, Tornado Cash made it to the United States Treasury’s blacklist. This announcement on the 8th of August triggered a series of bans on the protocol’s open source code, which, despite what the sanctions predict, does not prevent its operation.
According to the US Treasury Department, $7 million worth of stolen virtual currencies had been laundered on the protocol since 2019. The indictment names Tornado Cash as a facilitator of cybercrimes and guarantees that it “will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them”.
A day later, Dune Analytics data showed that Circle, the issuer behind the USDC stablecoin, froze over 81 addresses linked to Tornado Cash with around 75,000 USDC.
The protocol’s official website has been shut down, as well as Tornado Cash’s official and contributors’ accounts on GitHub.
Nevertheless, Tornado Cash remains in a strong position for multiple chains in the DappRadar DeFi Dapps Ranking.
What is Tornado Cash?
Tornado Cash is a fully decentralized non-custodial protocol that offers cryptocurrency mixing services. The community governs the DAO, which has a total value locked (TVL) of $430.09 million at the time of writing.
By using the crypto mixer, you can shield your transaction history in multiple blockchains from public view. Tornado Cash obfuscates the origin of your crypto, so no one on the blockchain can track them back to you or whatever happened before.
It was created in 2019 by a group of developers who made the code open source so that anyone could benefit and contribute to it.
The protocol, however, has a long history of links to hacks and stolen crypto and this wasn’t the first time it’s suffered sanctions.
Crypto mixers and the privacy flag
However strange crypto mixing services like Tornado Cash may sound, they do provide people with privacy, something many influential people in the crypto space support and need.
After the US Treasury’s latest sanctions, Ethereum co-founder Vitalik came forward to defend the protocol.
While for many people one of the biggest advantages of blockchains like Ethereum is the transparency of all recorded transactions, there are those who believe that not everything needs to be public.
Decentralization is immune to governments
Sure, the US Treasury Department can forbid all US persons to use Tornado Cash. But, for obvious reasons, its power cannot reach the functioning of decentralized ledgers and their dapps. Due to Tornado Cash’s very nature, such sanctions are technically impossible.
There is no way that the smart contracts that guarantee the mixer to work can be subject to the laws of any country, whether it is the land of freedom or not.
Which brings us to the central point of this discussion. How ethical is it to ban open-source code or the work of programmers? What happened to free speech?
Would every centralized financial institution that has had money laundering in its transactions also be banned? The community’s responses to the sanctions were quite illustrative.
Furthermore, someone has been using Tornado Cash’s blacklisted addresses to send small amounts of ETH to celebrities and brands. Jimmy Fallon and Puma are some of the awardees whose wallets received 0.1 ETH, according to Etherscan.
The anonymous troll move amused the Tornado Cash community by proving how far-fetched this situation is.
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And don’t forget to check out Tornado’s Cash dapp page to access statistics.