Ethereum Block Builders Comply with Tornado Cash Sanctions: Fed Reports
A recent report from the Federal Reserve Bank of New York, released on Wednesday, revealed that Ethereum block builders have largely adhered to the sanctions imposed on the crypto mixer Tornado Cash.
Although some activity on the platform continues, the Fed’s report assesses the impact of the U.S. Treasury’s Office of Foreign Assets Control (OFAC) blacklisting on Tornado Cash’s usage.
The report indicates that block validators closest to a transaction’s origin are more likely to cooperate with the sanctions, especially after a court ruling in August 2023 upheld OFAC’s decision.
Validators further away from the transaction’s source are less likely to comply, however, particularly if they are non-U.S. persons outside the country.
“We find direct evidence of large builders switching to a cooperative posture following the ruling, giving credence to the idea that clarity around regulation is a pivotal factor in determining whether to cooperate,” the paper states.
The report’s findings also highlight the ongoing tension between privacy and regulatory compliance in cryptocurrency.
While mixers like Tornado Cash serve a legitimate purpose for users seeking financial privacy, their potential for exploitation by criminal entities has sparked global law enforcement scrutiny.
Recall that Tornado Cash was sanctioned by OFAC in August 2022 following allegations that it was used to launder approximately $7 billion, including at least $455 million stolen on behalf of North Korea.
Today the US sanctioned Ethereum addresses associated w/ a privacy service called Tornado cash.
Circle immediately froze the USDC in those accounts. GitHub suspended contributors to Tornado.
If you were waiting for the opening shot of big brother’s assault on crypto
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