Tornado Cash Sanctioned by US Treasury
Tornado Cash, the Ethereum-based non-custodial open source software project, has been sanctioned by the United States’ Treasury department.
The sanctions announced on Monday stop people in the US, and anyone subject to US jurisdiction, from using the cryptocurrency mixer.
All property, as well as interests in property, of Tornado Cash in the US or held by US persons are blocked and must be reported to the Office of Foreign Assets Control (OFAC).
The crypto tool enables users to mix their coins using its smart contract, obscuring the prior trail of coins exchanged over a transparent ledger.
The sanction relates to the smart contract protocol. These actions have created a bad precedent for open-source software development.
Following the US Treasury's announcement, it was discovered that Circle, the centralised issuer of stablecoin USDC, has also blocked every sanctioned address from using USDC.
As tracked by internet readers, the number of black-listed USDC addresses now stands at 81.
These activities have prompted many to doubt the security of storing digital assets in a centralised location, even for non-criminals who want to employ privacy-enhancing techniques.
Tornado Cash Co-creator's Github Account Suspended
Roman Semenov, the co-creator of Tornado Cash, had his GitHub (open source development repository) account disabled. He responded by questioning whether it is now illegal to create open-source code.
Considering the nature of the restrictions imposed this could disturb freedom-loving crypto fanatics. These activities also offer various tools in the so-called DeFi space which rely on centralised stablecoins and may have centralised development choke points.
As painful as it may seem, Bitcoin's spontaneous and decentralised nature is a reason why such open-source software exists today.
Open-source software will continue to function as intended, but with increased pressure on software/wallet/protocol developers, only the strongest and most truly decentralised networks will remain.
When considering the long-term case for Bitcoin, one of its most compelling value propositions is that it is an asset with no counterparty risk or dilution (devaluation) risk.
Author: Emmanuel Baiden
7 years experience within the financial services sector most notably in Sales, Trading, research and writing articles within the crypto space. I have a bachelor's degree in International Business and a Master's in Investment and Risk Finance . I am also an associate member of the Chartered Institute for Securities and Investment.