American government bans crypto mixing service Tornado Cash

The crypto mixing service Tornado Cash has been blacklisted by the American government. Using a mixing service, users can hide the source or destination of cryptocurrencies. The government has banned US residents from interacting with the protocol, citing the reason that it was used at scale to launder money.

The crypto mixing service Tornado Cash has been blacklisted by the American government. Using a mixing service, users can hide the source or destination of cryptocurrencies. The government has banned US residents from interacting with the protocol, citing the reason that it was used at scale to launder money.

Tornado Cash developer arrested in The Netherlands

The Dutch Fiscal Information and Investigation Service (FIOD) has arrested a possible Tornado Cash developer in Amsterdam, following the American sanctions. He is suspected of facilitating money laundering and involvement in the concealing of criminal cash flows. The FIOD had already started an investigation into Tornado Cash last June.

Debate flares up

Tornado Cash’ code, like the code of many other crypto projects, is open source. This means anyone can look at it, and propose changes. This process isn’t illegal, since code is a language, and the government cannot ban its production. Furthermore, mixing services like Tornado Cash aren’t illegal, or unethical by definition. The arrest of this developer has thus raised many questions. This has also given rise to many methaphorical questions, like “Are car manufacturers responsible for terrorist attacks carried out with their cars?”.

All wallet addresses linked to Tornado Cash have been put on a blacklist, meaning that it is now illegal to interact with these addresses. However, it’s practically impossible to deny an incoming transaction on a blockchain, which has given rise to a number of problems. This became clear when an anonymous crypto user started sending small amounts of Ether to well-known crypto accounts from a Tornado Cash address. This resulted in the addresses being marked as illegal, and thus becoming unusable on many platforms.

The crypto sector has voiced a lot of criticism regarding the handling of the situation by intelligence agencies. A decision like this leads to many complications with many different aspects. It’s currently unclear what the future hold for developers, and which, if any, changes will be made to the current regulations.