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Tornado Cash Ban: Vitalik Buterin on Finance and Privacy

 


Vitalik Buterin, co-founder of the second-largest cryptocurrency Ethereum , said he used the Tornado Cash mixing service, which has now been sanctioned by the US government.


“I come out as someone who used TC [Tornado Cash] to donate to [Ukraine], ” Vitalik Buterin wrote in a tweet on Aug. 10, 2022. Buterin was responding to a tweet by Jeff Coleman. Coleman explained that crypto mixers like Tornado Cash could be used for good causes like donations to support Ukraine .

"The desire to donate to Ukraine is a great example of a legitimate need for financial privacy [...] in this regard, I'm curious if there are any documented examples of Tornado Cash being used for this purpose," shared Jeff Coleman, co-founder of Counterfactual, on Twitter.


Tornado Cash is a smart contract mixer based on Ethereum . The U.S. Treasury Department 's Office of Foreign Assets Control (OFAC) banned use of the mixer on August 9, 2022.


According to the U.S. Treasury Department, Tornado Cash “ has been used to launder over $7 billion worth of cryptocurrencies since inception in 2019. ” This includes the $455 million stolen by the Lazarus Group, a state-sponsored hacking group in the Democratic People's Republic of Korea (DPRK) .


Tornado Cash co-founder Roman Semenov tweeted that his GitHub account was suspended. In addition, a number of other Crypto Mixer resources have also been blocked. These include TC's GitHub organization, smart contract addresses linked to Tornado Cash on Circle, and Infura's RPC.


The ban on Tornado Cash sparked a series of discussions about crypto industry regulation.


Jerry Brito, is the CEO of Coin Center, a non-profit organization dedicated to policy issues related to cryptocurrencies . Brito believes that the ban is about sanctioning an instrument that has a neutral character and “ like any other technology can be used for good or bad purposes”. Brito criticized that the authorities should instead take action against criminal groups or individuals.


Jake Chervinsky, a crypto attorney and head of policy at the Blockchain Association, argued that while the association supports the US Treasury Department's "mission to combat illegal activity in cryptocurrency," it is also concerned that the ban on the mixer "crosses a line that the US government has always respected [and] should continue to uphold as good policy" .


Chervinsky went on to state that this decision to “sanction a decentralized protocol threatens the smart [and] balanced approach of cryptocurrencies ” that the agency previously defended .


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