Tornado Cash Sanctioned by OFAC: Crypto Mixer Appeal Falls Flat
Tornado Cash, the well-known crypto mixing service, has been sanctioned by the U.S. Office of Foreign Assets Control (OFAC) since August. The dispute between the regulatory body and the crypto mixer began in 2018 when two individuals of interest to the U.S. government were found to be using its services. Coinbase supported Tornado Cash’s appeal against the sanctions, emphasizing the importance of privacy for legitimate users of crypto mixers.
- Crypto mixers provide privacy to users and require a higher number of legitimate users than malicious actors to function effectively.
- Court documents revealed Tornado Cash’s argument that it is a decentralized software project on the Ethereum blockchain, but the government viewed the minting of TORN tokens by the Tornado Cash DAO as evidence of centralization.
- Judge Robert Pitman of the U.S. District Court rejected Tornado Cash’s lawsuit, stating that the government considers it an entity with a property interest, justifying the sanctions.
- As a result, Tornado Cash remains on OFAC’s Specially Designated National list, preventing it from conducting business with banks and numerous other entities.
Hot Take: The rejection of Tornado Cash’s appeal highlights the ongoing struggle between privacy advocates and regulators. While crypto mixers can be misused by cybercriminals, they also serve a vital purpose in protecting the privacy of law-abiding individuals. This case further demonstrates the challenges faced by decentralized projects in navigating regulatory frameworks.
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