Below are my thoughts on the recent Tornado Cash ban, what it means for Average Crypto Users, and what it means for the Criminals that allegedly motivated this ban:
With the recent sanctioning of Tornado Cash, there have been many opinions regarding privacy and preventing criminal activity in the space. Unfortunately for the average user, this means a massive invasion of privacy, but for criminals, not much has changed.
To understand why this is the case, you must understand what Tornado Cash is.
Tornado Cash is what is considered a ‘Crypto Mixer.’ Simply put, Tornado Cash is a series of smart contracts and liquidity pools creating large volumes of mixed transactions across the collective funds of all users, this allows individuals to obfuscate the source, destination, and transaction history of their funds.
So, why was it banned? Well, being able to obfuscate this sort of financial data makes Tornado Cash highly appealing to criminals looking to hide the source and destination of illicit funds.
So what is the problem? Sanctioning’TC’ should prevent criminals from being able to use it, right? Well, not exactly, because ‘TC’ is governed via a series of smart contracts, living on a decentralized blockchain, any user can still access the service via the blockchain.
So how is this enforced? By using ‘TC’, then moving the funds into a major CEX or a bank under U.S. jurisdiction, a trail is formed that can be found, whether via an audit or otherwise. Users are then prosecuted for interacting with the tool regardless of their intended use.
Well, for ordinary citizens looking to have privacy over their money, this is a big issue. However, nothing really changes for foreign actors such as Lazarus, who were are suspected for the Ronin Network hack amongst other attacks that ‘allegedly’ spurred this decision.
Tornado Cash is still accessible via the blockchain, and as a North Korea-funded entity, the U.S. sanctions don’t exactly mean much. So what does this mean for the broader crypto community and DeFi as a whole?
To me, this is simply an attack on average, everyday crypto users, in an attempt by the government to limit their privacy and freedom over their assets, masked in a cloak of insincere and inaccurate statements around concern for public safety.
Many members of the DeFi community disagree with me and feel that this was a necessary step that needed to be taken towards stopping criminal activity in the space, while others see this as an attack on our privacy.
Do you think an outright ban was the right choice, and how do you think this affects the DeFi community more broadly?