Faced with growing regulatory pressures, the crypto landscape is organizing and defending itself. At the heart of this tumult is Tornado Cash, a platform victim of sanctions described as illegal by industry lobbyists.
Unity is strength: a collective action against the US Treasury
Faced with obsolete regulation that often hinders innovation, a counter-offensive is taking shape. In this context, two heavyweights in the defense of the crypto industry have taken the initiative to act. These are the Blockchain Association and the DeFi Education Fund.
The US Treasury is emerging as their common enemy, with its penalties imposed on Tornado Cash. These actions have drawn outrage from advocacy groups, calling them ” unprecedented and illegal“.
On June 2, these groups jointly filed a amicus curiae brief. This is a way to publicly support the legal action of Coin Center, a cryptocurrency advocacy organization.
Their argument? The Treasury’s Office of Foreign Assets Control (OFAC) has imposed sanctions on cryptocurrency mixer Tornado Cash. According to advocacy groups, this decision requires a review and possible removal of sanctions
Tornado Cash: victim or culprit?
According to these associations, Tornado Cash, as software, cannot be sanctioned by OFAC. Their demands point to the inadequacy of the sanctions, claiming that OFAC has created a fictional “person” to justify its actions against the cryptocurrency mixer.
Sometimes diverted for illegitimate activities, including money laundering orchestrated by hackers affiliated with North Korea, Tornado Cash is not only intended for malicious purposes.
Defense groups insist on this point and highlight the perfectly legal uses of this tool, which turns out to be a real bulwark for confidentiality within the Ethereum blockchain.
This struggle highlights growing tensions between regulators and cryptocurrencies. Despite claims by the US Treasury regarding national security threats posed by cryptocurrency mixers, the industry is stepping up to defend its rights.
The future of Tornado Cash, and more broadly that of the crypto industry, will undoubtedly depend on the outcome of this regulatory tussle. Who will win, the regulator or the cryptocurrencies? The verdict is still pending. Along with this tension, the US Congress is shaking the SEC to more actively support the crypto sector.
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