• Tornado Cash, an Ethereum mixer, now bans sanctioned addresses

  • Tornado Cash, a prominent Ethereum mixer that aids in the obfuscation of crypto transactions, has announced that it will block crypto addresses sanctioned by the Office of Foreign Assets Control (OFAC), a US Treasury Department enforcement body.

    As a result of the news, OFAC-approved crypto wallet addresses will no longer be allowed to use Tornado Cash. “Maintaining financial privacy is critical to protecting our freedom, but it should not come at the expense of noncompliance,” Tornado Cash tweeted on Friday.

    Tornado Cash stated that it blocks OFAC-sanctioned crypto addresses using the Chainalysis oracle – a smart contract that validates whether a crypto wallet address is included in a sanctions designation.

    The announcement came a day after the Treasury Department said that the North Korean hacker outfit Lazarus is responsible for the $625 million stolen from the Axie Infinity’s Ronin bridge. Tornado Cash has now blacklisted an Ethereum address that has been included to the Department’s sanctions list and is purportedly linked to the Ronin exploit.

    Over a month ago, Tornado Cash designed a contract to block sanctioned addresses. So far, the contract has generated three transactions, each of which has blocked a total of 24 addresses. On Thursday, the Ronin exploit-related address was added.

    Tornado Cash co-founder Roman Semenov stated that the adjustments are only performed at the frontend, i.e. at the level of its decentralized application (dapp). “The smart contracts are immutable,” Semenov stated in a Friday tweet. “There is a distinction between the protocol (onchain smart contracts) and the frontend (dapp).”

    In other words, he indicated that penalties could not be used to shut down Tornado Cash.

    Decentralized protocols Uniswap and 1inch also restricted various services from their frontends last year. Uniswap delisted a number of tokens that seemed to be securities or derivatives offerings, while 1inch began geofencing US IP addresses.

    Tornado Cash’s move has been attacked on Twitter, with some claiming that sanctioning addresses does not prevent criminal actors from using its services. According to them, all users have to do is transmit their bitcoin to other non-sanctioned accounts to continue using Tornado Cash.

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