Tornado Twist

Hot on the heels of our piece on the U.S. government banning Tornado Cash yesterday, an amusing twist has emerged, possibly caused by someone that was not all too impressed by the sanction:

• When OFAC added Tornado Cash to the its Specially Designated Nationals list yesterday, it meant that any U.S. entity or ‘person’ could no longer interact with it.
• Criticism of the Treasury Department’s move was swift on Twitter, decrying the attack on the principle of privacy and highlighting practical advantages of anonymous donations.
• Vitalik Buterin even confirmed that he had used Tornado Cash himself to donate to Ukraine.
• Others have pointed to the fact that it seems strange to sanction a decentralised smart contract with no agency, and where the only ones losing out are those who receive the outflows.
• Which is why the pulse quickened yesterday when it was noticed that someone was arbitrarily sending amounts of 0.1 ETH to notable wallets from Tornado Cash.
• Celebrities such as Jimmy Fallon and Shaquille O’Neal, along with Crypto Twitter accounts such as Loomdart and Sassal, were all targeted.
• Known as dusting, this idea was suggested by @Depression2019 on Monday but it was not confirmed to have been executed by him.

Just how the U.S. Treasury Department will respond is yet to be seen, but it does potentially create a regulatory mess of tainted wallets and shines a light on the difficulty of sanctioning a DeFi protocol.