Let’s see what senior crypto reporter Anita Ramaswamy thinks:
Tornado Cash has been the conversation of the city this week in crypto cycles. The U.S. administration’s Office of Foreign Asset Control (OFAC), a watchdog within the Treasury, made boycotts against the cryptocurrency mixer for its part in assisting facilitate money laundering. North Korean-backed hackers, among others, have utilized the Tornado Cash outlet to cover snatched crypto-related with some of the highest-profile hacks in web3 to time, encompassing last week’s Nomad stealing and the hack of play-to-earn video game Axie Infinity before this year.
But in analyzing boycotts, OFAC was almost utilizing a sledgehammer to break a nut. The agency’s official announcement on the issue announced that the outlet had promoted a $7 billion rate of money laundering which occurs to be the total cost of crypto possession that has been delivered through Tornado Cash since it was established in 2019. Meanwhile, blockchain analytics provider Elliptic announces only ~$1.5 billion of reserves on Tornado are correlated to crime, encompassing ransomware invasions and fraud. The rest, Elliptic complains, could encompass “legitimate uses of mixers such as Tornado, such as to preserve financial privacy.”
So what are some of those valid usages? One instance came from Ethereum co-producers Vitalik Buterin, who said on Twitter that he has utilized the service to send payments to aid Ukraine securely without the awareness of the Russian administration.
The OFAC’s declaration does not distinguish between illegal and legal usage lawsuits, so several law-abiding crypto users are probably enduring. Two main crypto infrastructure providers Alchemy and Infura obstructed entry to their API from any wallets that utilized Tornado Cash. Circle has reportedly fixed the ~$75,000 price of its USDC stablecoins that were related to Tornado through a shared wallet, regarding Dune Analytics data.
Some have been delivering crypto through Tornado Cash to well-known wallets carried by celebrities such as Jimmy Fallon and Shaquille O’Neal in an endeavour to look for them by getting their wallets prohibited under the boycott laws.
OFAC’s heavy-handed effort appears as a mistaken strategy that puts up more questions than it settles when it appears to enforcement. Only time will say how the recent plays out, but in the meantime, the crypto population is, understandably, sad.