US sanctions restricting use of privacy software, crypto firms
Earlier this month, the US Treasury Department sanctioned a ban on Tornado Cash, a crypto privacy tool that mixes funds from different users to hide the original source of crypto funds. Authorities accused the mixing firm of helping bad actors launder more than $7 billion in digital assets since its inception in 2019.
As cryptocurrency has caught hype around the world, it has also raised some issues, such as money laundering and bad actors using them due to their anonymous nature. In the same way, the square has notified and involved the authorities to prevent illegal money transfers.
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As a result, law enforcement agencies have imposed sanctions against privacy tools that also interfere with other users’ privacy.
After authorities clamped down on mixing firm Tornado a few weeks ago, criticism emerged from crypto-oriented companies, with at least one lawmaker voicing support for the mixing firm. The lawmaker urged that these limits could harm the privacy of US users as local users also use privacy tools to protect them online.
Crypto mixer services circulate the crypto funds of a user from multiple crypto platforms and other users’ assets to hide the transaction details and users involved in it.
It was not the first blending firm to be accused by US law enforcement, as the authority has already hinted at sanctions against North Korean blending company Blender.io in May. Officials claimed they found the firm involved in helping the North Korean hacking group Lazarus, which staged a $600 million heist targeting the Ronin Bridge network in March.
Sanctions against Tornado Cash also disrupted national security
More and more people are using internet security tools. For many, Tor and VPNs are go-to privacy tools, but the crypto community has different tools that ultimately fulfill the same mission: to ensure privacy.
According to allegations by the US Treasury Department’s Office of Foreign Asset Control, Tornado Cash opened a way for hackers to launder more than $96 million in stolen funds. According to the official’s statement, these funds belonged to the Nomad crypto heist in August and the Harmony blockchain heist that occurred in June.
Citing the sanctions imposed, a nonprofit crypto platform, Coin Centre, argued that law enforcement has exceeded their legal powers, paving the way for violating “constitutional rights to due process and free speech.”
Congressman Tom Emmer, who received $50,000 in contributions from the Blockchain Association this year, questioned Treasury Secretary Janet Yellen this week by sending a memo to issue a justification for Tornado Cash. He further added that sanctions have disrupted national security and affected “the right to privacy of every American citizen.”
Another major crypto project, Tether, also expressed support for Tornado and refused to freeze Tornado’s accounts on the network, saying they intended to keep them.
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On the other hand, a Treasury Department representative stated that the agency aims to disrupt only criminal behavior and will use its sanctioning authority to prevent the financial system from illegal operations such as money laundering and cyber theft.
Supportive statements for Tornado Cash emerged after Dutch authorities arrested the firm’s developer in August; after a few days, the US imposed sanctions accusing them of facilitating money laundering.
Featured image from Pixabay and chart from TradingView.com
