According to the official website of the U.S. Department of the Treasury, Roman Storm, the joint founder of Tornado Cash, has been arrested by the FBI and the Internal Revenue Service on charges of conspiracy to money laundering, conspiracy to operate an unlicensed funds transmission business, and conspiracy to violate sanctions. At large.
FBI Director Christopher A. Wray said: "Today's announcement should remind criminal organizations around the world that they are neither untraceable nor anonymous. Whether you are a hacker or facilitator, you cannot hide behind a keyboard. Indicted today engaged in a conspiracy to launder money for cybercriminals, including North Korean cybercrime organizations seeking to evade sanctions. As we have done in this operation, the FBI will continue to dismantle the infrastructure to profit from their crimes, and those who assist these criminals will be held accountable."
U.S. Attorney for the Southern District Damian Williams said: "As alleged, Tornado Cash was a notorious cryptocurrency mixer that laundered more than $1 billion and violated U.S. sanctions." Roman Storm ) and Roman Semenov allegedly ran Tornado Cash and knew it facilitated this type of money laundering. While they publicly claimed to provide technologically sophisticated privacy services, they actually knew they were helping hackers and scammers hide their The fruits of crime. Today’s indictment is a reminder that money laundering through cryptocurrency transactions is against the law and those involved in such money laundering will face prosecution.”
Launched in 2019, Tornado Cash was co-founded by Roman Semenov and Roman Storm, who previously worked at a white hat hacking agency. Since the blockchain is completely transparent and traceable, anyone can check the user's transactions on the blockchain. For the privacy protection needs of some users, there are "coin mixers" like Tornado Cash. " market space.
For example, when user A sends money to user B through Tornado Cash, other people have no way to trace who sent money to B and where A's money went, thus achieving the role of privacy protection. However, seeking anonymity is not only the demand of users who are more cautious about KYC certification. As hackers steal coins intensified, Tornado Cash has become more and more "famous". "Dirty money" turns to Tornado Cash.
On August 8 last year, the Office of Foreign Assets Control (OFAC) under the U.S. Department of the Treasury announced sanctions against Tornado Cash, and stated that U.S. entities or individuals were prohibited from using the Tornado Cash service, and all accounts that continued to use the service would be frozen.
As a result of this action, all Tornado Cash property and interests within the United States or owned or controlled by U.S. persons will be frozen and must be reported to OFAC. All transactions by U.S. persons or within (or in transit) within the United States involving the property or interests of designated or otherwise blocked persons are prohibited unless authorized by a general or specific license issued by OFAC exempting these Prohibition includes a ban on providing donations, goods or services to sanctioned targets.
In theory, Tornado Cash is censorship resistant. In May 2020, the team completed the decentralized operation of Tornado Cash, and the code cannot be modified from then on, which means that as long as Ethereum does not close or disappear, Tornado Cash will run forever. Even though Tornado Cash was sanctioned, its code is still running normally on Ethereum.
However, when OFAC’s sanctions ban came out, Web3’s donation platform Gitcoin announced the suspension of funding for Tornado Cash, blockchain infrastructure providers Infura and Alchemy stopped providing network services for Tornado Cash, and the centralized stablecoin USDC issuer Circle also Banned users' access to Tornado Cash... A large number of teams and products that used to promote decentralized beliefs quickly cut off contact with Tornado Cash, and Tornado Cash, which has lost most of its users, has "existed in name only" in the United States ".
In the encryption world where the spirit of decentralization is engraved in the bone marrow, the US sanctions will undoubtedly attract strong opposition and criticism from a large number of people in the encryption community, but at present, the US sanctions cannot be changed. Many practitioners have expressed a point of view that the Tornado incident is just the beginning. As the industry moves towards the mainstream, there will be more and more frictions with the real world in terms of compliance and supervision, and greater collisions are coming.
Summarize
The U.S. sanctions on Tornado will still become an insurmountable gap in the encryption field for thinking about the road to decentralization in a short period of time. Whether the real encryption utopia world exists is still uncertain, because under the constraints and challenges of the real world, the encryption field Development still takes time and effort.
It is important that the crypto community and regulators engage in dialogue and cooperation to find a balance that protects individual privacy and liberty while ensuring compliance and responding to malicious behavior. Only on this basis can the encryption industry continue to develop and move towards a more mature stage.