Examining Tornado Cash Sanctions

Welcome to The Chopping Block! Crypto insiders Haseeb Qureshi, Tom Schmidt, and Tarun Chitra chop it up about the latest news in the digital asset industry. In this episode, Laura Shin, host of Unchained and author of The Cryptopians, also joined the conversation. 

Show topics:

• What Tornado Cash is and why it got sanctioned by the OFAC
• The difference between Tornado Cash and blender.io 
• Whether privacy is dead as a category and whether regulators are going after it
• How these sanctions have a negative impact on the funding of privacy projects
• How people within the industry can have different points of view, even when they understand the technology
• Whether the ban of Tornado Cash only means that malicious groups will just go and use other protocols
• Why regulation by enforcement sucks
• The asymmetry between the government’s sanction and the effort needed to push it back.
• What changes after the Merge for ETH in terms of centralization
• Whether some MEV solutions make Ethereum more centralized
• Why MEV is intrinsic to blockchains and whether it is impossible to get rid of it
• Why Proposer-Builder Separation is helpful for the network
• Whether MEV is illegal and the plausibility of major exchanges not extracting MEV
• Why Facebook has an MEV extraction business model, according to Tarun
• How some NFT exchanges are not enforcing royalties
• What Sudoswap is and how it works
• How the royalties were there to bootstrap the supply side of NFTs
• Why Tarun thinks music NFTs will never happen
• The economic reasoning around royalties
• The differences between NFT marketplaces like OpenSea and Magic Eden
• Whether NFTs have a real-world use
• How Dragonfly’s acquisition of Metastable brought Laura some old memories

Hosts

• Haseeb Qureshi, managing partner at Dragonfly Capital
• https://twitter.com/hosseeb
• Tom Schmidt, general partner at Dragonfly Capital
• https://twitter.com/tomhschmidt
• Tarun Chitra, managing partner at Robot Ventures
• https://twitter.com/tarunchitra 

Laura

• Twitter: https://twitter.com/laurashin

Episode Links

Tornado Cash

Treasury Press release: 

https://home.treasury.gov/news/press-releases/jy0916#:~:text=WASHINGTON%20%E2%80%93%20Today%2C%20the%20U.S.%20Department,since%20its%20creation%20in%202019

Developer arrested: https://www.fiod.nl/arrest-of-suspected-developer-of-tornado-cash/

Coin Center’s article authored by Jerry Brito and Peter Van Valkenburgh: https://www.coincenter.org/u-s-treasury-sanction-of-privacy-tools-places-sweeping-restrictions-on-all-americans/

Second Coin Center’s article authored by Jerry Brito and Peter Van Valkenburgh: https://www.coincenter.org/analysis-what-is-and-what-is-not-a-sanctionable-entity-in-the-tornado-cash-case/

Coin Center may challenge the US Treasury's decision to sanction Tornado Cash: https://decrypt.co/107475/coin-center-tornado-cash-ban-court

Circle freezes USDC in sanctioned wallets: https://www.theblock.co/post/162172/circle-freezes-usdc-funds-in-tornado-cashs-us-treasury-sanctioned-wallets 

Crypto exchange dYdX blocked accounts that received funds from Tornado Cash: https://www.coindesk.com/business/2022/08/11/crypto-exchange-dydx-blocked-accounts-that-received-even-small-amounts-from-tornado-cash/

The possibility of forking Tornado Cash: https://www.coindesk.com/tech/2022/08/10/cloning-tornado-cash-would-be-easy-but-risky/

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