Earlier this month, the US Treasury Department approved a ban on Tornado Cash, a crypto privacy tool that combines funds from different users to hide the original source of crypto funds. The authority claimed that the mixer company has helped launder more than $7 billion in digital assets since its inception in 2019.
As cryptocurrency has become a hype worldwide, it has also raised some issues, for example money laundering and bad actors using them due to their anonymous nature. Likewise, the space has warned and involved government agencies to prevent illegal money transfers.
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As a result, law enforcement agencies have imposed sanctions on privacy tools that also disrupt the privacy of other users.
After authorities restricted mixer company Tornado a few weeks ago, criticism emerged from crypto-oriented companies, with at least one lawmaker expressing support for mixer company. The lawmaker insisted 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 a user’s crypto funds from various crypto platforms and other users’ asset pool to hide the transaction details and users involved.
It was not the first blending company to be accused by US law enforcement, as the authority already imposed sanctions on North Korean blending company Blender.io in May. Officials claimed they found the company involved in aiding North Korean hacker group Lazarus, which flagged a $600 million raid on the Ronin Bridge network in March.
Sanctions on Tornado Cash have also disrupted national security
More and more people are turning to internet security tools. For many, Tor and VPNs are the most widely used privacy tools, but the crypto community has several tools that ultimately fulfill the same mission: ensuring privacy.
In line with allegations made by the US Treasury Department’s Foreign Asset Control office, Tornado Cash opened up a way for hackers to launder stolen money worth more than $96 million. According to the official’s statement, these funds belonged to the August Nomad crypto heist and the Harmony blockchain theft that took place in June.
Citing the sanctions imposed, a non-profit crypto advocacy platform, Coin Center, argued that law enforcement authorities have exceeded their legal powers, paving the way for violating “constitutional rights to a fair trial and freedom of expression.” “.
Congressman Tom Emmer, who received $50,000 in contributions from Blockchain Association this year, asked Treasury Secretary Janet Yellen this week by sending a note giving a reason for Tornado Cash. He added that sanctions have disrupted national security and compromised “the right to privacy of every American citizen.”
Another major crypto project, Tether, also expressed support for Tornado, refusing to freeze Tornado’s accounts on its network, as it intended to keep them.
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On the other hand, a representative of the Treasury stated that the agency only wants to disrupt criminal behavior and will use its sanctioning power to prevent the financial system from carrying out illegal operations such as money laundering and cyber thefts.
Supporting statements for Tornado Cash emerged after Dutch authorities arrested the company’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