When two storms collide
One of the things I have learnt about weather systems from documentaries about nature is that when two of them meet or collide, the stronger one usually swallows up the other becoming a super storm. The process of one of them 'consuming' the other is usually a sight to behold with increased destructive power for the newly created one as one of them goes into oblivion.
I recall when I penned in the eye of the storm which highlighted how tornado cash was being used as a conduit by hackers of various blockchains as well as defi platforms to launder or channel the funds stolen from their exploits, I had an inkling that we had not heard the last about them.
The reason for this is that they were appearing all too often in the news for all the wrong reasons. For the benefit of those who may have missed my previous article, I will highlight a few things about tornado cash. Tornado cash is a mixer on the Ethereum block chain which serves as a 'black box' for crypto transactions. It masks transactions by executing interference on the block chain making it difficult to track funds to their final destination.
As the name of tornado cash began popping up in most of the recent cases of funds being stolen in the crypto space, all eyes in the crypto space were on it. According to Elliptic, a firm which tracks financial crimes or illicit activity in the crypto space via blockchain analytics, Tornado cash has been used to launder about 1.5 billion USD worth of funds.
It was only a matter of time before law enforcement also beamed their search light on them as well. The action of sanctioning Tornado cash and several addresses associated with it by the United States Treasury department was hinged on the accusation that its services had been used by the Lazarus group to launder stolen crypto currencies. There is no love lost with this hacker group because of its links with North Korea.
The implication of these sanctions is that it is now illegal for American citizens to use the Tornado cash service as its protocol and associated smart contracts have been blacklisted by the US Treasury department. This calls for concern as innocent citizens who aren't engaged in illicit activity but want to protect their privacy stand the risk of facing prosecution if they use the service henceforth. According to a CoinTelegraph report, the penalties for breaching these sanctions could range from fines of btw USD 50K to 10 million or prison terms of 10 to 30 years.
The casualties of the ensuing super storm continue to rise by the day. Users of the decentralised derivatives exchange, dYdX who had interacted with tornado cash. The addresses of such users have been banned by the exchange. More recently Dutch authorities have reportedly arrested the developer of tornado cash accusing him of being involved in money laundering via tornado cash.
One might argue that the Devs of tornado cash had no knowledge that stolen funds were being laundered through their platform hence they should be free of blame. However with their platform being fingered virtually constantly, it should have given them room for concern. But we really need to ask if there's nothing they could have done to check mate their platform being used to move ill gotten funds because it had become clear that they were now the popular option for money laundering.
The Devs might have become comfortable with this because of the benefits to the platform was receiving because of the increased traffic due to their increasing popularity. They might have actually been basking in the euphoria of being in the spotlight. Alas everything comes with a price, the clamp down by law enforcement is likely aimed at shutting down the platform as was done with previous mixers.
As the drama surrounding tornado cash continues to unfold, we are likely to see another provider or platform stepping up to take its place as there can be no vacuum where there exists the demand for a service . That's a rule of nature.
