On August 8, the ethereum mixing service Tornado Cash, and all the crypto addresses associated with the platform, were officially banned by the US Treasury Department’s Office of Foreign Assets Control (OFAC). After the ban, software development and open source internet hosting service Github deleted some of the Tornado Cash commitments and suspended some of the project’s contributors.
Tornado Cash Github Contributors Suspended From Github, Blacklisted ERC20s Left To Liquidity Providers
Tornado Cash has become a hot topic in the cryptocurrency world as the US government decided to ban the privacy-enhancing ethereum mixing service on Monday. US Treasury watchdog OFAC did not reveal exactly why Tornado Cash was sanctioned, but it is suspected to be due to the North Korean hacking syndicate known as the Lazarus Group.
Lazarus Group employees allegedly used Tornado Cash to commingle funds. On April 15, 2022, the official Tornado Cash Twitter account explained that it had blocked flagged ethereum addresses listed on the OFAC Specially Designated Nationals And Blocked Persons list (SDN). “Tornado Cash uses [a] Chainalysis oracle contract to block OFAC-sanctioned addresses from accessing dapp,” the project’s social media account said at the time. The Tornado Cash Twitter account added:
Maintaining financial privacy is essential to preserving our freedom, but it should not come at the cost of non-compliance.
Now details are reporting that developers who contributed to the Tornado Cash codebase on Github have been suspended and a few commits have been deleted. Tornado Cash’s founder, Roman Semenov, explained that his Github account was suspended. “My Github account was just suspended. Is it illegal to write open source code now?” Semenov asked. According to a Twitter user named “Bowtiediguana,” all of the addresses OFAC associated with Tornado Cash have approximately 437 million dollars in stablecoins like USDC and USDT, along with ETH and WBTC as well.
Following the OFAC ban, Circle blacklisted all usd coins (USDC) associated with the Tornado Cash platform. Bowtiediguana expects Tether and Bitgo, the custodian of WBTC, to do the same, as these ERC20 tokens can be frozen at the smart contract level. The Defi teacher also expects ERC20 custodians like Bitgo to “suspend redemptions of the tainted WBTC, rendering these tokens worthless.” Bowtiediguana added:
Liquidity providers will likely end up as bagholders for blocked WBTC (and stablecoin) assets if they don’t withdraw liquidity from the DEX *immediately*.
Ethereum supporter says OFAC ban was ‘opening shot of Big Brother’s attack on crypto’
Meanwhile, after the ban, a large number of members of the crypto community discussed the US government’s actions. “I’m sure the bad guys will stop using Tornado Cash because it’s ‘illegal’,” Shapeshift founder Erik Voorhees wrote. “Just like they don’t use illegal weapons, smuggle illegal drugs or illegally launder money in any way they can find. Law-abiding Americans are the only ones hurt by this, Voorhees added. Ethereum supporter Ryan Adams called the ban an attack on crypto.
“Today, the United States sanctioned Ethereum addresses associated with a privacy service called Tornado cash. Circle immediately froze USDC in those accounts. GitHub suspended contributors to Tornado. If you were waiting for the opening shot of big brother’s attack on crypto, this was it,” Adams said. Crypto- proponents discussed other ideas such as decentralization of Github in a censorship-resistant way and others talked about creating “new instances of the Tornado contract.”
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Jamie Redman
Jamie Redman is the news editor at Bitcoin.com News and a financial technology journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source and decentralized applications. Since September 2015, Redman has written more than 5,700 articles for Bitcoin.com News about the disruptive protocols emerging today.
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