Tornado.Cash Sanctioned by the US

[zasad@]

https://fortune.com/2022/08/25/tornado-cash-developer-russian-fsb-linked-company/
Developer at Treasury-sanctioned Tornado Cash worked for company linked to Russian security agency
"Alexey Pertsev, developer of cryptocurrency mixer Tornado Cash, was formerly employed by a company linked to Russian security agency FSB, according to a report from intelligence firm Kharon."

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[Abiky]

https://fortune.com/2022/08/25/tornado-cash-developer-russian-fsb-linked-company/
Developer at Treasury-sanctioned Tornado Cash worked for company linked to Russian security agency
"Alexey Pertsev, developer of cryptocurrency mixer Tornado Cash, was formerly employed by a company linked to Russian security agency FSB, according to a report from intelligence firm Kharon."

If that's the case, then the developer must pay a heavy price. But not everyone who contributed towards the Tornado.Cash project are in the same boat. The US sanctions will now raise a red flag to anyone who used the mixer protocol even if the intentions weren't malicious at all. I guess we'll be seeing the authorities knocking down on Vitalik Buterin's door soon just because he used the mixer to donate money to Ukraine. This is all messed up, so unless the situation is challenged at the court, things will only get worse for crypto/Blockchain tech. It's a dangerous precedent that will mark the industry forever. If crypto advocates fail on defending this emerging industry, then everything we've fought for will vanish in an instant. I hope there's light at the end of the tunnel so crypto can fulfill its mission of bringing banking to the unbanked. Just my thoughts

[mindrust]

According to CNBC, the US' Treasury Department sanctioned on-chain mixing service Tornado.cash because of "money laundering" activities. Here's the link to the article: https://www.cnbc.com/2022/08/08/crypto-mixing-service-tornado-cash-blacklisted-by-treasury-department-.html

I fail to see how successful the US government would be at sanctioning a decentralized mixing protocol, since there's no single entity behind it. You can't hold someone accountable for patronizing money laundering activities if everything's decentralized by design. Even if the website goes down, users can still access the smart contract directly without limitations.

Am I missing something here? Does this mean all mixing protocols/services are doomed? Your input will be greatly appreciated. Thanks in advance.

Haven't they caught one of the tornado.cash devs? It is as simple as that. They may not catch everybody who uses the platform but they can close down the project's repo (which they already did I believe), throw all the devs to jail and it is over just like that. The project will eventually die off because there won't be anybody developing and promoting it. Nobody will ever know its existence.

If any blockchain related project is still available to us, it is because the US government allows it.

[SistaFista]

Well, decentralized mixing protocols are often used by bad people to do money laundering, but that is not the purpose of it.
The purpose of mixing tool is to ensure our privacy is safe. It is not the mixing tool is bad, but the people who use it with bad purpose are.
Monero is a good privacy coin, we can keep our identity private without external mixing tool.

[RussiaUkraineTranslation]

Well, decentralized mixing protocols are often used by bad people to do money laundering, but that is not the purpose of it.
The purpose of mixing tool is to ensure our privacy is safe. It is not the mixing tool is bad, but the people who use it with bad purpose are.
Monero is a good privacy coin, we can keep our identity private without external mixing tool.

Monero is fine but it doesn't have smart contract functionality and cannot work with Ethereum, BNB chain, Polygon etc. That's why using 0xMonero is necessary. It can mix and bridge privately from Ethereum to BNB chian.

[Abiky]

Haven't they caught one of the tornado.cash devs? It is as simple as that. They may not catch everybody who uses the platform but they can close down the project's repo (which they already did I believe), throw all the devs to jail and it is over just like that. The project will eventually die off because there won't be anybody developing and promoting it. Nobody will ever know its existence.

If any blockchain related project is still available to us, it is because the US government allows it.

They did close the GitHub repo, but someone else still managed to duplicate the source code. This shows us that governments efforts are futile when trying to destroy something as open source and decentralized as Tornado.Cash. It would've been best to target individuals directly than the mixer protocol itself. If we let the government get away with this, then it'll be the end of the whole crypto/Blockchain industry as we speak. What makes you think the US government won't take a similar action to Bitcoin or Ethereum if it deems them a threat to the very existence of the US Dollar?

I think the US overreaching its authority will result in legal action by crypto proponents. Taking this to the court would be the only way to defend the future of open source and crypto/Blockchain tech. Otherwise, you can say goodbye to privacy coins, mixers, and possibly even traditional cryptocurrencies like BTC and ETH. Who knows what the future holds for the entire industry? Just my opinion

[zasad@]

https://twitter.com/PouriaAzimzade1/status/1558527845177204740
"This is no joke !
Celsius CEO free and rich
Voyger CEO free and rich
Sifu free and rich
Do Kwon free and rich

Tarnado cash dev is in prison !
Lesson : you’re allowed to scam people and steal their money but don’t ever think about giving them privacy.. "

[Abiky]

https://twitter.com/PouriaAzimzade1/status/1558527845177204740
"This is no joke !
Celsius CEO free and rich
Voyger CEO free and rich
Sifu free and rich
Do Kwon free and rich

Tarnado cash dev is in prison !
Lesson : you’re allowed to scam people and steal their money but don’t ever think about giving them privacy.. "

Exactly. It's like privacy is a crime, when it shouldn't be that way. There are law-abiding citizens who need privacy in order to protect their transactions from prying eyes. Especially, businesses who have utmost sensitive information. This situation needs to be taken to the court, for the good of our privacy and the crypto/Blockchain industry. That's assuming the defendant wins the case. If he/she/they lose, then it'll be bye-bye to privacy for good.

The US government started with the Blender.io mixer and now it went against Tornado.Cash. But that won't stop it from taking action against other centralized and non-custodial mixers. These are bad times we're living into, so expect the unexpected. Just my opinion

[kojektea]

if it is used only for money laundering of course it is better destroyed. I'm also clueless about these mixing services, they work in terms of appa which makes them widely used? some say this service is used for those who want to transact in secret, that means it is made in privacy, but how can this only be used for illegal things?

[coin-investor]

Am I missing something here? Does this mean all mixing protocols/services are doomed? Your input will be greatly appreciated. Thanks in advance.

The article stated

The U.S. Department of Treasury on Monday sanctioned the popular cryptocurrency mixer Tornado Cash, banning Americans from using a service that the government said,

is for the American citizens but for other countries they can still use or the people in America can find a way to use, the Cryptocurrency industry still needs mixing protocols/services the way things are being centralized in the Crypto industry, mixers support and adhere to decentralization which is the core teaching of Cryptocurrency

[Abiky]

The article stated

The U.S. Department of Treasury on Monday sanctioned the popular cryptocurrency mixer Tornado Cash, banning Americans from using a service that the government said,

is for the American citizens but for other countries they can still use or the people in America can find a way to use, the Cryptocurrency industry still needs mixing protocols/services the way things are being centralized in the Crypto industry, mixers support and adhere to decentralization which is the core teaching of Cryptocurrency

Yes. American citizens will be mostly affected by the sanctions. But other countries could restrict their people from using the Tornado.Cash service, especially if they have close ties to the US. I think people in Russia, Venezuela, China, and other foreign countries won't have a problem using the aforementioned mixer protocol. Besides, it's still possible to use Tornado.Cash directly through ETH smart contracts no matter where you are in the world. That's thanks to the decentralized and open source nature of Tornado.Cash. The code is widely available for anyone to copy, modify and/or redistribute, so I wouldn't be surprised if a Tornado.Cash clone is born on a completely different blockchain to challenge sanctions imposed by the US government. Just my thoughts

[RussianEnglishTranslation]

The article stated

The U.S. Department of Treasury on Monday sanctioned the popular cryptocurrency mixer Tornado Cash, banning Americans from using a service that the government said,

is for the American citizens but for other countries they can still use or the people in America can find a way to use, the Cryptocurrency industry still needs mixing protocols/services the way things are being centralized in the Crypto industry, mixers support and adhere to decentralization which is the core teaching of Cryptocurrency

Yes. American citizens will be mostly affected by the sanctions. But other countries could restrict their people from using the Tornado.Cash service, especially if they have close ties to the US. I think people in Russia, Venezuela, China, and other foreign countries won't have a problem using the aforementioned mixer protocol. Besides, it's still possible to use Tornado.Cash directly through ETH smart contracts no matter where you are in the world. That's thanks to the decentralized and open source nature of Tornado.Cash. The code is widely available for anyone to copy, modify and/or redistribute, so I wouldn't be surprised if a Tornado.Cash clone is born on a completely different blockchain to challenge sanctions imposed by the US government. Just my thoughts

There are already some forks of Tornado Cash. Private bridges like 0xMonero's 0xTIP and blockbend are also options.

[zasad@]

https://www.cnbc.com/2022/09/08/coinbase-bankrolls-suit-against-treasury-department-following-tornado-cash-sanctions.html

"Coinbase is backing a lawsuit filed against the Treasury Department Thursday by six users of a recently sanctioned crypto service.
Treasury said the service helped launder billions from state-sponsored bad actors. But crypto enthusiasts argue that sanctioning crypto code is an overstep and could cause negative ripple effects in the tech industry.
“It sets a dangerous precedent,” Coinbase’s chief legal officer, Paul Grewal, tells CNBC."

[Abiky]

There are already some forks of Tornado Cash. Private bridges like 0xMonero's 0xTIP and blockbend are also options.

It seems so. They're fairly new to me, so I wouldn't pour large amounts of crypto on them just to be safe. I'm glad there are alternatives out there in order to help protect people's privacy. Just because crypto mixers exist, that doesn't mean they're solely used for malicious purposes. People have many legitimate reasons to use a mixer, especially when they don't want third parties spying on their transactions. Businesses need privacy to help protect their utmost sensitive information, so I don't get why the government is completely against crypto mixers.

I get the government wants to stop money laundering and tax evasion, but taking down the mixer completely by sanctioning it is not the ideal path to take. Instead of sanctioning mixers, why doesn't the US government sanction the individuals using the mixers for illegal activities? I'm pretty sure this will be challenged at the court soon (if it hasn't already), so only time will tell us what lies ahead for crypto/Blockchain tech's prominence in the mainstream world. Just my opinion

[dansus021]

Mixing service yes is always doomed. but they will keep coming up no matter us banned or other gov want to banning him

behind mixing service is to get more privacy but nowadays no no for the beginning of the service mixer service has been used as money laundry.

hacker is bad we must add line of code that block if hacker try to mix their dirty money to avoid this kind sactioned

[mindrust]

Mixing service yes is always doomed. but they will keep coming up no matter us banned or other gov want to banning him

behind mixing service is to get more privacy but nowadays no no for the beginning of the service mixer service has been used as money laundry.

hacker is bad we must add line of code that block if hacker try to mix their dirty money to avoid this kind sactioned

The code may survive regardless of what happened to the devs but these mixers are private businesses. People won't automatically trust some random people that build the same service from the same code. Lots of mixing services came and went before. Most of them were scams. It will take lots of time before people start trusting them and that means a lot of lost time for those who need these services.

[Abiky]

The code may survive regardless of what happened to the devs but these mixers are private businesses. People won't automatically trust some random people that build the same service from the same code. Lots of mixing services came and went before. Most of them were scams. It will take lots of time before people start trusting them and that means a lot of lost time for those who need these services.

People will just have to trust the code. Satoshi Nakamoto's identity was never known, yet people trust Bitcoin because of the way it was designed. Early crypto projects had anonymous developers behind them, but that didn't stop them from becoming highly successful in the long run. I wouldn't see any difference with non-custodial mixers (decentralized). Unfortunately, ever-increasing KYC/AML requirements has led the public to seek identifiable information about developers to help gain their trust. Developers who don't disclose their identities are quickly labeled as "scammers". I know that scams are fluent in crypto land, but not every project with unknown developers is actually a scam.

I believe it's best for mixing protocols to be created by anonymous developers in order to remain as censorship-resistant as possible. Governments can't hunt down developers if they don't know who they are. Tornado.Cash didn't prioritized censorship-resistance, so it quickly fell down the drain after the sanctions (even thought smart contracts are still accessible on the ETH blockchain). Most so-called "non-custodial mixers" rely on centralized infrastructure, so taking them down should be a piece of cake. Unless developers host the frontend interface on censorship-resistant networks like IPFS or ZeroNet, mixers won't be going anywhere soon. Just my opinion

[mindrust]

The code may survive regardless of what happened to the devs but these mixers are private businesses. People won't automatically trust some random people that build the same service from the same code. Lots of mixing services came and went before. Most of them were scams. It will take lots of time before people start trusting them and that means a lot of lost time for those who need these services.

People will just have to trust the code.

They shouldn't if the code can be changed by the devs anytime they want which is the case here.

There used to be a paper wallet service called, bitaddress or something. It was an open source and a highly trusted service. Then some other person bought out the domain/business and placed a spyware/malware inside the code. Lots of people got burned because of that.

They surely did trust the code.

But little they know, they should have read and understood the code everytime they used that service which is obviously impossible. Not only impossible, most of these users don't even know how to code.

[zasad@]

There are still 6 similar cryptocurrency mixers in the Ethereum ecosystem: RAILGUN, Buccaneer V3, White Ethereum, 0xTIP, Messier 87 Black Hole and Cyclone Protocol
https://www.elliptic.co/hubfs/tornado-cash-alternatives.pdf
"Elliptic’s internal analysis identifies Cyclone Protocol as the highest risk amongst the Tornado
Cash alternatives active today. Its high transaction limits, the relatively large liquidity of its
mixing pools and its ability to mix the token of a sanctioned entity (TORN) makes it a cause
for concern. It’s confirmed use to launder at least some proceeds of DeFi exploits, the large
amount of funds it has since processed and the apparent absence of its developer team to
address concerns only strengthen these risks.
Also scored “medium-high” is Buccaneer V3, which has not addressed any AML concerns
throughout its development. BV3 is unique to the other protocols as it takes the form of a
token, rather than a service. A main mitigating factor of BV3, however, is that it claims to utilize
technology that is currently being tested. Whether it lives up to the features and capabilities it
has promised remains to be seen – with several rival obfuscation protocols casting doubt that
it can.
The remaining protocols all have mitigating factors arguably significant enough to ward
off large-scale illicit use. RAILGUN, while popular, generates compliance reports and has a
partially doxxed development team, meaning that it will likely comply with any investigations.
Its technology has also been scrutinized by rivals. Messier 87, meanwhile, has actively stated
that it will comply with subpoenas and provide such reports to authorities. Finally, White
Ethereum and 0xTIP struggle with low mixing limits and low liquidity pools respectively, making
them unviable replacements for Tornado Cash-level obfuscation at present.
Elliptic will continue to monitor the post-Tornado obfuscation industry across Ethereum Virtual
Machine (EVM)-compatible chains and update both virtual asset businesses and investigators
when new risks emerge. To keep ahead of these risks and receive updates from Elliptic’s
Research & Investigation Team, sign up to Elliptic Connect and stay updated with our weekly
newsletter."
elliptic.co (C)

[Abiky]

There are still 6 similar cryptocurrency mixers in the Ethereum ecosystem: RAILGUN, Buccaneer V3, White Ethereum, 0xTIP, Messier 87 Black Hole and Cyclone Protocol
https://www.elliptic.co/hubfs/tornado-cash-alternatives.pdf
"Elliptic’s internal analysis identifies Cyclone Protocol as the highest risk amongst the Tornado
Cash alternatives active today. Its high transaction limits, the relatively large liquidity of its
mixing pools and its ability to mix the token of a sanctioned entity (TORN) makes it a cause
for concern. It’s confirmed use to launder at least some proceeds of DeFi exploits, the large
amount of funds it has since processed and the apparent absence of its developer team to
address concerns only strengthen these risks.
Also scored “medium-high” is Buccaneer V3, which has not addressed any AML concerns
throughout its development. BV3 is unique to the other protocols as it takes the form of a
token, rather than a service. A main mitigating factor of BV3, however, is that it claims to utilize
technology that is currently being tested. Whether it lives up to the features and capabilities it
has promised remains to be seen – with several rival obfuscation protocols casting doubt that
it can.
The remaining protocols all have mitigating factors arguably significant enough to ward
off large-scale illicit use. RAILGUN, while popular, generates compliance reports and has a
partially doxxed development team, meaning that it will likely comply with any investigations.
Its technology has also been scrutinized by rivals. Messier 87, meanwhile, has actively stated
that it will comply with subpoenas and provide such reports to authorities. Finally, White
Ethereum and 0xTIP struggle with low mixing limits and low liquidity pools respectively, making
them unviable replacements for Tornado Cash-level obfuscation at present.
Elliptic will continue to monitor the post-Tornado obfuscation industry across Ethereum Virtual
Machine (EVM)-compatible chains and update both virtual asset businesses and investigators
when new risks emerge. To keep ahead of these risks and receive updates from Elliptic’s
Research & Investigation Team, sign up to Elliptic Connect and stay updated with our weekly
newsletter."
elliptic.co (C)

Thanks for sharing this, mate. It's good to know there are numerous alternatives to Tornado.Cash, especially when the US government exceeded its authority. We need privacy tools to protect our utmost sensitive information. Just because Tornado.Cash is a mixer, doesn't mean it was solely used for illegal purposes. There were people that were using the tool for legitimate purposes. Sanctioning, or even banning a decentralized mixer, would be sending us a message that "privacy is a crime".

It's a good thing the OFAC came to their senses by separating the good actors from the bad ones. People can now ask for a license from such agency to withdraw their funds from Tornado.Cash. While this defeats the purpose of "No KYC", at least it's better something than nothing. We're going to have to see if governments (especially the US government) will escalate towards privacy coins and decentralized exchanges. Crypto/Blockchain tech is growing at fast pace in terms of popularity and mainstream adoption, so I wouldn't be surprised if there's further scrutiny from the government against the aforementioned tools. No one knows what the future holds for the crypto/Blockchain industry, so we can only hope for the best. Just my opinion