Tornado Cash Sanction: Did The US Sanction Its First Robot?

The US Treasury recently sanctioned an open source privacy smart contract on the Ethereum blockchain after discovering it has ties to money laundering. The Treasury flagged the Tornado Cash protocol yesterday, after discovering that North Koreans used this protocol to launder illicit gains.

The Tornado Cash protocol was added to an infamous list called “Specially Designated Nationals and Blocked Persons (SDN List),” a 1,194-page long document consisting of persons linked to money laundering, terrorism financing, and weapons proliferation around the world.

That said, some onlookers are lamenting that this sets a worrisome precedent as it is a new kind of entity getting listed.

Onlookers Are Worried The Tornado Cash Sets A Worrisome Precedent

Before now, some Bitcoin and crypto addresses have been added to the list, which made sense considering the owners could be using these accounts for illegalities. However, the Tornado Cash listing is the first time technology, and not a person, is getting listed. Commenters say this listing doesn’t sanction those committing money laundering crimes with the protocol but sanctions “every single American citizen.”

Commenting on the development, Coincenter noted:

“In this case, the sanctions laws are being used to create a limitation on spending money not merely with some person who has been found guilty of a crime or even suspected of terrorism. This is a limit on any American who wishes to use her own money and a freely available software tool to maintain her own privacy—including for otherwise entirely legal and personal reasons.”

Meanwhile, this also raised questions of whether the government sees a smart contract, an open-source and independent software (a robot), as a sovereign entity.

Many now worry about what precedent this could set for the future of financial privacy, as it is only likely going to get more invasive from here on. While privacy concerns on tools like this are normal, considering that crypto is only going to go more mainstream from here. This issue is undeniably a tightrope to walk both for regulators and crypto enthusiasts.

Finally, the conspiracy making the rounds are that the recent move could be geared towards a bigger play, like the launch of a CBDC.