{"id":1066,"date":"2022-08-09T16:44:46","date_gmt":"2022-08-09T16:44:46","guid":{"rendered":"https:\/\/grandpascrypto.com\/?p=1066"},"modified":"2022-08-09T16:44:47","modified_gmt":"2022-08-09T16:44:47","slug":"u-s-treasury-bans-americans-from-using-tornado-cash","status":"publish","type":"post","link":"https:\/\/grandpascrypto.com\/u-s-treasury-bans-americans-from-using-tornado-cash\/","title":{"rendered":"U.S. Treasury Bans Americans From Using Tornado Cash"},"content":{"rendered":"\n

tl;dr Summary:<\/strong> U.S. Treasury recently added the Tornado Cash website and a list of Ethereum addresses to its Specially Designated Nationals list, effectively banning American citizens from using it.<\/em><\/p>\n\n\n\n

In an announcement<\/a> on the 8th of August, 2022, the U.S. Department of the Treasury’s OFAC (Office of Foreign Assets Control) banned cryptocurrency mixer Tornado Cash.\u00a0<\/p>\n\n\n\n

About Tornado Cash<\/h2>\n\n\n\n

Tornado Cash is a decentralized, non-custodial protocol that promotes transaction privacy by severing the on-chain link between the sender and receiver addresses. It employs a smart contract to promote anonymity by accepting ETH and other tokens from one address and allowing users to withdraw to another. <\/p>\n\n\n\n

These smart contracts function as a pool, combining all deposited assets and generating a private key that proves you accomplished the deposit process. The sender can then use this private key to withdraw the deposited monies to any address.<\/p>\n\n\n\n

So what happened?<\/h2>\n\n\n\n

“Today, Treasury is sanctioning Tornado Cash, a virtual currency mixer that launders the proceeds of cybercrimes, including those committed against victims in the United States,” the report said. <\/p>\n\n\n\n

As a result, no one in the United States can engage with Tornado Cash or any Ethereum wallet addresses<\/a> associated with the protocol unless authorized by OFAC. In other words, all U.S. persons are responsible for ensuring they do not interact with crypto transacted through the service. Those who do so may face criminal charges.<\/p>\n\n\n\n

According to the report, Tornado Cash has been used to launder over $7 billion in cryptocurrencies since its inception in 2019, including the $625 million Ronin Network attack<\/a> and the $96 million Harmony Bridge attack<\/a> by the North Korean hacker Lazarus Group. <\/p>\n\n\n\n

Tornado Cash announced<\/a> in April that it was utilizing a tool from blockchain tracking firm Chainalysis to prevent addresses sanctioned by the U.S. government from using the privacy app. But this was not enough. As the report says, “Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks.”<\/p>\n\n\n\n

It is not the first time that OFAC has sanctioned a mixer. In May 2022, another mixer service called Blender.io<\/a>, which operates on the Bitcoin network, was blocked under similar circumstances. <\/p>\n\n\n\n

According to a senior<\/a> Treasury Department official, “Since we sanctioned virtual currency mixer Blender.io<\/a>, we have not seen evidence to suggest that it has remained active post that designation.” <\/p>\n\n\n\n

The community did not take the news well, with people calling it an attack on the tool instead of the actors. <\/p>\n\n\n\n

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Today\u2019s action does not seem so much as a sanction against a person or entity with agency. It appears instead to be the sanctioning of a tool that is neutral in character and that can be put to good or bad uses like any other technology. https:\/\/t.co\/Gr8skWKiaR<\/a><\/p>— Jerry Brito (@jerrybrito) August 8, 2022<\/a><\/blockquote>