Torndao Cash Stirs Up Controversy
Market Meditations | August 25, 2022
Tornado Cash, the decentralised cryptocurrency mixer, has created a whirlwind of controversy since being targeted by the OFAC.
- The OFAC’s initial actions meant that any U.S. entity or ‘person’ could no longer interact with the protocol.
- The drama continued when police arrested Alexy Pertsev, the protocol’s developer. Pertsev’s arrest was followed by severe backlash and protests from those who believed it set a dangerous precedent for cryptocurrency and censorship.
- A court hearing held in the Netherlands on August 24th ruled that Pertsev would have to be detained for an extra 90 days after the judge rejected granting bail to the defendant.
- On August 24th, Tether (USDT) announced that it “works closely with law enforcement worldwide to assist in investigations, including freezing addresses“, and that they are “almost in daily contact with key law enforcement officers“.
- However, Tether also stated that it had not yet been specifically ordered to freeze any Torando Cash addresses.
- Tether’s announcement concluded that other stablecoin providers, such as Circle, may have jeopardised the work of law enforcement by prematurely freezing funds.
The story of Tornado Cash has widespread implications for regulating the entire crypto market, but should help to set clearer guidelines for developers.
