Two private donations made as crypto protests

A business professor, Omid Malekan, made donations to Planned Parenthood and Russians secretly helping Ukrainian refugees. He had them use Tornado Cash, the recently sanctioned blockchain transaction privacy application, to protest the US Treasury Department.

Why it’s important: The right to act freely is personal to Malekan. “I’m originally Iranian. One of the reasons my family immigrated to America was because of the kind of rights here that you don’t get in many other places,” he said.

Context: Since the application has been sanctioned, Malekan, as a resident and citizen of the United States, may have broken the law by using the service.

• Tornado Cash hides who the sender and receiver are in an Ethereum transaction.

Go deeper: In his new book, Re-Architecting Trustpublished in July, Malekan argues that by using the financial system to further its foreign policy goals, the US can drive crypto adoption in many other places.

What they say: Financial companies have to “assume that everyone is a money launderer, a drug dealer or a tax evader. And then they have to go through this risk-based process and make sure you’re not,” Malekan explains.

• Anti-money laundering rules have made finance “one of the few industries built on a presumption of guilt,” he says.
• No one checks to make sure you have never stolen before you enter the supermarket, he said.

Yes, but: As we all know, Chainalysis estimated that something like $14 billion in illicit funds moved across blockchains in 2021.

• Meanwhile, the United Nations estimates that there could be $2 trillion in money laundering annually, across the globe.

But to the Malekan, the cost of fighting this losing battle is shutting people out of the financial system. It is the poorest and most marginalized who cannot get approval to use it, he says.

• “To me, it’s like the war on drugs. We spent a lot of money, but we didn’t stop people from getting drugs,” he says.

In the weeds: Malekan did not retain a lawyer before protesting, but he did speak informally with a couple of lawyer friends. “They agreed that the chances of the government actually prosecuting me for anything were low, but they weren’t zero either,” he says.

Be smart: Malekan doesn’t think most people realize how transparent crypto is, compared to banks. When every transaction you’ve ever made from one address is published online (from every serious bet on a market move to every stupid NFT).

• “This is why a service like Tornado Cash in the context of crypto has a million different benign uses,” he said – here’s some examples.

What he watches: “I think the consequences for non-crypto people are actually greater than for crypto people because we’ve now crossed the line from people dealing with sanctioned companies or governments to criminalizing the act of seeking privacy,” Malekan said.