Tornado Cash: The Sanctions-Busting Crypto Investor's Best Friend | Crypto

Tornado Cash: The Sanctions-Busting Crypto Investor’s Best Friend

Read Time:2 Minute

– The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash, a cryptocurrency mixer that blends funds together to make their sources harder to trace.
– Mixing services can be used to launder stolen funds, and the U.S. Treasury says Tornado Cash reportedly processed over $500 million from several online hacks and heists.
– The sanctions stipulate that any assets currently sitting in Tornado Cash are frozen, transactions to or from Tornado Cash are prohibited, and the mixers code itself is banned.
– Critics of the sanctions are worried about their implications for crypto users privacy and potential future shutdowns.
– In September, six individuals challenged these sanctions by bringing a lawsuit, funded by the crypto exchange Coinbase, against the U.S. Treasury Department.
– Cryptocurrency mixers, also known as tumblers or blenders, are designed to make actions on the blockchain more private by mixing together data from separate transactions.
– Mixing services charge a fee, usually between 0.25% and 3% of the amount sent through the mixer.
– OFAC enforces economic sanctions penalties that work as a deterrent against prohibited activities on certain countries, individuals and business entities.
– The recent sanction against Tornado Cash is list-based, which calls for the assets in the entitys possession to be blocked and prohibits transactions with any associated actors.
– In compliance with the government sanction, Circle, the issuers of USDC a stablecoin tied to the U.S. dollar froze over $75,000 of assets on the platform.
– The developers of Tether (USDT), another U.S.-dollar-based stablecoin, made a public statement that they would not be freezing all accounts associated with Tornado Cash, and would wait for an official, direct request from OFAC.
– Exchange platform Coinbase is funding a lawsuit against the U.S. Treasury over the sanctions, claiming the Treasury overstepped its authority by blocking the software instead of just individual actors.
– For the majority of users, sanctions at this level wont affect their investments, but it does suggest that other crypto platforms used for money laundering could be shut down.
– Because Tornado Cash operates on the Ethereum blockchain, these events also have the potential to affect Ethereum as a whole.
– Make sure the products youre investing in are from vetted providers that are on top of regulations, says Katherine Dowling, chief compliance officer at Bitwise Asset Management.
– It can be tempting to use services that promise high returns or total privacy, but these platforms arent without risk.
– When Tornado Cash was sanctioned, the government seized control of all its addresses and froze the associated assets, which could set a standard for future

GettyImages 1355037951 Tornado Cash: The Sanctions-Busting Crypto Investor's Best Friend

Leave a Reply

%d bloggers like this: