On August 8, 2022, the US Department of the Treasury's Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash, citing allegations it helped North Korea's Lazarus hacker group launder millions of dollars worth of crypto proceeds stolen from various crypto projects over the past few years. Coin Center believe that OFAC has overstepped its legal authority by adding certain Tornado Cash smart contract addresses to the Specially Designated Nationals And Blocked Persons (SDN) List, potentially violating US Americans' constitutional rights to due process and free speech.
Peter Van Valkenburgh, Director of Research at Coin Center, joined us for an in-depth look at how OFAC operates, why he believes this sanctioning represents an overreach, what's next for Tornado Cash, and what this means for the rest of the blockchain ecosystem.
Topics covered in this episode:
- An overview of the Tornado Cash case
- What is the Office of Foreign Assets Control (OFAC)?
- How is it determined who gets on the OFAC list? What happens to you if you're on the list?
- Does this only apply to US Americans?
- How does one get removed from the list?
- What did Tornado Cash do wrong, and what should they have done?
- Is there an acceptable level of maliciousness within the system?
- Comparison to PGP
- Why Tornado Cash was targeted over other privacy enhancing tools
- The reaction from the crypto ecosystem
Episode links:
Sponsors:
- Tally Ho: Tally Ho is a new wallet for Web3 and DeFi that sees the wallet as a public good. Think of it like a community-owned alternative to MetaMask. - https://epicenter.rocks/tallycash
This episode is hosted by Friederike Ernst. Show notes and listening options: epicenter.tv/458
