- OFAC’s sanctioning of Tornado Cash has not affected its usage
- The smart contract can still be called, despite its front end and Github being taken down
- Co-founder Roman Semenov says it was designed to withstand such acts
Mixing service Tornado Cash is still available despite its website and Github codebase being banned, calling into question the efficacy of such a ban. Sanctions watchdog the Office of Foreign Assets Control (OFAC) yesterday added Tornado Cash to its Specially Designated Nationals list, meaning that any U.S. persons and entities are prohibited from interacting with Tornado Cash or any of the Ethereum wallet addresses tied to the protocol. However, it does little to actually prevent use of the tool, which was built with this precise scenario in mind.
Tornado Cash Blamed for Helping North Korea Launder Funds
Tornado Cash launched in 2019 and has grown to become the premiere mixing service for Ethereum and ERC-20 tokens, and as a result it has become the method by which North Korean hacking groups have been able to launder money from their activities. Most notable among these is the Ronin Bridge hack of $540 million, which was pinned on North Korean hacking group Lazarus.
U.S. authorities blacklisted the addresses used by Lazarus in this instance, with Tornado Cash blacklisting them afterwards, but not before they could launder $70 million. However, the hackers were still able to call the smart contract behind the mixer and carry on doing what they were doing, and yesterday’s judgement seems to have had the same end result.
Down But Not Out
Tornado Cash may be ‘down’ to all intents and purposes, but it is far from out. Tornado Cash co-founder Roman Semenov told Coindesk in January that the protocol was “specifically designed…to be unstoppable, because it wouldn’t make much sense if some third party [like developers] would have control over it.”
Semenov built on this by telling Bloomberg in March that it is “technically impossible” for sanctions to be enforced against decentralised protocols like Tornado Cash because of how they are designed. Indeed, there is still a way for a user to call Tornado Cash through its contract, according to China blockchain journalist Colin Wu:
After the sanctions, Toranado’s website was banned, and Github removed itscode base; but it did not affect the use, and it can be called directly through the smart contract interface, or can be accessed through IPFS or directly through the CID of IPFS. According to @xiangganzi
— Wu Blockchain (@WuBlockchain) August 9, 2022
If anything, the closure of Tornado Cash’s front end may only harm those who were using it for legitimate means while making no difference to those using it for illicit means.
Bravo.
