U.S. Congressman Requests an Explanation on Tornado Cash Sanctions

The United States Congressman Tom Emmer sent a letter to the Treasury Department’s Office of Foreign Asset Control (OFAC) asking them to explain the Tornado Cash sanctions imposed by OFAC earlier this month. The Congressman also emphasized that this type of sanctioning is unprecedented in the United States, as the government has never sanctioned technology before.

The Jury’s Still Out for Crypto

The sanctions on Tornado Cash definitely stirred the pot for the crypto community, not knowing what to expect. Some players in the crypto game argue that the sanctions on Tornado Cash are a small price to pay for faster institutional adoption.

When Alexey Pertsev, one of the co-founders of the technology, was arrested along with the lead developer of Tornado Cash in the Netherlands by the Dutch authorities, a lot of crypto influencers pointed out the alleged injustice: As Do Kwon of Terra (LUNA) is walking free even after the embezzlement and money laundering allegations, Pertsev is getting arrested for simply writing an open-source code.

Moreover, Cardano (ADA) founder Charles Hoskinson brought up the fact that the U.S. government is implying that the software developers are accountable for how their coded software is used, even if it’s out of their control.

The situation was also commented on by Vitalik Buterin, the co-founder of Ethereum (ETH). Despite acknowledging the fact that Tornado Cash is often used for crime, Vitalik argued there are plenty of legit reasons for using a crypto mixing service. To illustrate, Vitalik Buterin sent crypto donations to Ukraine and wanted to conceal the receiver’s identity.

Will Lazarus Group Strike Again?

According to the documents published by the Treasury Department’s Office of Foreign Asset Control (OFAC), there’s been over $7 billion laundered through the crypto mixer Tornado Cash since it was created. At least half a billion dollars is related to attacks carried out by Lazarus Group, the ferocious hackers from North Korea, intensely trained by the totalitarian regime.

Since the stolen crypto funds are mainly used to fund nuclear testing and missile trials, it poses a threat to the security of the world. However, it’s unclear if a ban on Tornado Cash will be enough to stop the notorious North Korean hacker gang.

In conclusion, as well put by Congressman Tom Emmer: “Nonetheless, technology is neutral and the expectation of privacy is normal.” As many crypto players assume, privacy in the sector will be taken more seriously in the future and there’s going to be a lot more anonymous open source apps. However, the full extent of the impact that the Tornado Cash incident has on crypto is yet to be seen.

On the Flipside

• Despite backlash from the crypto community, it is evident that Tornado Cash was the go-to choice for Lazarus Group in every single case so far in 2022.

Why You Should Care

The sanctions imposed by the U.S. government on Tornado Cash might go either way, with a clearer legal framework and smoother adoption or with more bans and confusion.

Learn more about Vitalik Buterin’s donation to the Ukrainian army

Read about Circle’s CEO Jeremy Allaire calling for legal framework

Find out more about Lazarus Group’s recent attempt to hack DeBridge