Roman Storm, the co-founder and CEO of Tornado Cash’s cryptomixing platform, is hoping to be cleared after the sanctions against Tornado Cash were lifted.
In Storm’s Dec. 18 motion to dismiss, he cites the recent Fifth Circuit ruling that the Treasury's Office of Foreign Assets Control (OFAC) overstepped by sanctioning Tornado Cash’s immutable smart contracts. This ruling acknowledged that software which is autonomous and that nobody controls, cannot be categorized as property.
This document states that the ruling has been made. “makes clear that there is no deliberate action Mr. Storm could have taken here.” Furthermore, “the developers’ lack of control over the proceeds renders them legally incapable of conspiring to commit money laundering and negates the knowledge element of a money laundering charge.”
“Tornado Cash is difficult to control due to the immutable nature of smart contracts," Stephen Ajayi, dApp Audit Technical Lead at blockchain cybersecurity firm Hacken, told Decrypt. "It is fully decentralized, globally accessible, and hard to censor on Ethereum, which is the core principle of decentralization.”
The court of appeals’ conclusion that smart contracts are not legal is said to compound these points. “are not the ‘property’ of a foreign national or entity,” You can also “cannot be blocked” The law also protects the creators of contracts. Contract creators are also covered by the law. “powerless to stop” They are not to be used by any entity sanctioned.
“Mr. Storm could no more choose to stop them than he could choose to stop the sun from rising,” This document contains the text.
Tornado Cash is a decentralized coin mixer created to preserve crypto users' privacy by anonymizing deposits through cryptography. Inflows of funds from wallets linked to major hacks have been seen by the service. Due to such transactions—including some allegedly linked to North Korea—the U.S. Treasury Department sanctioned Tornado Cash in early August 2022.
Privacy advocates have reacted positively towards the Fifth Circuit’s recent ruling. Anoop Nannra is the CEO of Trugard Labs and web3 Intelligence. He recognized this. “this is a step in the right direction.”
Nannra voiced concerns over the extent of government’s power. It was also evident in the decision, which stated that judges had previously raised this issue. “decline the Department’s invitation to judicial lawmaking—revising Congress’s handiwork under the guise of interpreting it.”
“Legislating is Congress’s job—and Congress’s alone,” The judges highlighted. Privacy advocates may welcome the court ruling but the impact of the measure is limited.
Nevertheless, there are those who believe that government officials should tighten their grip even more on cryptocurrency. Irfan Shaik is the founder of Interstate’s blockchain auctions. He suggests an extreme solution. He said that regulators should aim to regulate the Ethereum network’s validators.
He explained to me that “the government could target users of the mixer and even punish block builders for including censored transactions in their blocks.”
Then he highlighted it. “major builders actually censor ethereum transactions that are sanctioned.” Censorship.pics data shows that Ethereum block makers censoring transaction has fallen from under 70% in summer this year to less than 5%.
Stacy Elliott is the editor.