Tornado Cash
Tornado Cash is a crypto tumbler – which is essentially a service that mixes cryptocurrencies that are not private with a bunch of other funds to obfuscate the source. It’s not impossible to track or trace the transactions, but it does make it more difficult – like putting up a bunch of roadblocks and switching road sign directions.
So why not use a privacy coin? Good question! Because the things that people want to use Tornado Cash for are solved with privacy-based cryptos. Anyway.
In August, the U.S.Department of the Treasury’s Office of Foreign Assets Control (OFAC) blacklisted Tornado Cash and Blender.io – making it illegal for any US citizen or company to use the service(s). The reason for the blacklist? North Korea’s Lazarus Group laundering stolen crypto through Tornado Cash.
What makes this story scary is that two days after OFAC’s announcement, the dude who wrote the code (Alexey Pertsev), was arrested by Dutch authorities – because he wrote the code for Tornado Cash. Pertsev was held for 14 days pending an investigation.
When the 14 days were up, the judge denied bail and ordered him to stay in jail another 90-days while waiting for charges– even though he has not been charged with a crime. The Dutch police don’t even know why Pertsev was arrested.
Kraken’s founder Jesse Powell, Ethereum’s ($ETH.X) Vitalik Buterin, Cardano’s ($ADA.X) Charles Hoskinson, and Uniswap’s ($UNI.X) Hayden Adams were just some of the big names in crypto who criticized the move by OFAC and the Dutch.
In a nutshell, the furor in the crypto community is related to Pertsev’s arrest for writing code. Code that was then used for an illegal purpose.
To make matters worse, anyone who used Circle’s USDC ($USD.X) on Tornado Cash lost all of their USDC. Circle blocked all USDC addresses on Tornado Cash – whether you were innocent or not. 🌪️