Tornado Cache Saga Continues

Speaking of regulations the Tornado Cache saga continues with crypto lobbying group Coin Center reportedly planning on taking the US government sanctions against the controversial crypto mixing protocol to court.

This is because sanctions have only ever been applied to persons including individuals and institutions.

Applying sanctions to open source code on a decentralized blockchain is truly unprecedented and it’s quickly becoming a much bigger issue than anyone imagined.

Case in point even crypto compliance company TRM Labs recently admitted that Tornado Cache has created a serious compliance challenge given that Tornado Cache users are sending small amounts of crypto from the protocol to crypto wallets effectively blacklisting them from d5 and c5.

One of the developers behind the project was also recently arrested while it’s still unclear as to what he’s being charged. With if it is just because he wrote some code it could set a chilling precedent.

Could we see other crypto developers locked up for merely writing open source code.

Moreover the developers actually destroyed the admin keys to Tornado Cache way back in 2020 and the protocol was still technically legal until a couple of weeks ago. This means that crypto developers could be arrested for creating a crypto project or protocol after it is retroactively declared illegal just let that sink in.

Now to add insult to injury Tornado Cache actually had a compliance tool built in that would let users prove where their funds came from in the event that the exchange or crypto platform they were sending to were suspicious about where the crypto deposit had originated.

If that wasn’t bad enough it looks like other privacy oriented crypto projects and protocols are being targeted with the FTX exchange reportedly freezing accounts belonging to folks who had used a privacy-focused layer 2 for Ethereum called AZTEC network which is not a mixer like Tornado Cache.

AZTEC network responded to the reports with a Twitter thread where the team explained they’re working on a series of improvements to their layer 2 which will continue to preserve privacy while deterring illicit activity.

Now taken together these facts suggest that the folks in power aren’t fans of financial privacy even when the crypto projects or protocols are proactive in their attempts to comply with laws against illicit finance despite these laws not having any meaningful impact on illicit activity whatsoever.

This means there’s only one other reason why crypto privacy is under attack and that is control as I recently mentioned on instagram without privacy there is no financial freedom because if the individuals and institutions in power can see your transactions they can and will punish you.

You might think the absence of privacy in cryptocurrency is fine and it probably is for now as time goes on however and the trend of government overreach continues you could find yourself in trouble for making transactions that were legal at the time just like that Tornado Cash developer who’s now in jail. .

 

Tags: developers, jail, Tornado Cache