On Friday, Tornado Cash ad that it was using Chainalysis oracle contracts to block wallet addresses sanctioned by the U.S. Office of Foreign Assets Control, or OFAC. The measure comes after the US Treasury Department linked the North Korean collective Lazarus Group as the alleged perpetrator of the recent $600 million+ exploit of the Ronin Bridge. As reported by blockchain analytics firm Elliptic, hackers have sent approximately $80.3 million in Ether (ETH) through Tornado Cash. “Maintaining financial privacy is essential to preserving our freedom, however, it should not come at the cost of non-compliance,” said the Tornado Cash team.
Tornado Cash is a popular cryptocurrency mixing service used to obfuscate the trail of transactions for the sake of privacy. The Chainalysis Sanctions Oracle can validate whether a cryptocurrency wallet address has been included in a US, EU, or UN sanctions designation. But the co-founder of Tornado Cash, Roman Semenov, cleared up subsequently that the instrument only blocks access to the interface of the decentralized application, or DApp, and not to the underlying smart contract.
There have been traces of Tornado Cash in various controversial decentralized finance activities. In the $375 million Wormhole exploit in mid-February, hackers experimented with Tornado Cash using stolen funds. The same month, the team at LooksRare also partially used Tornado Cash to cash out more than $30 million worth of crypto. In a recent phishing attack on the Rare Bears Discord, which netted $800,000 worth of NFT, the hackers also funneled the stolen funds through Tornado Cash. Reports have also emerged that lFunds from a $33 million Crypto.com exploit were being laundered through the DApp.
However, it seems that Semenov has had enough of the association of the protocol with alleged illicit activities, discussing the possible jail sentence for non-compliance with the regulations by blocking access to people included in the sanctions lists.
Now do the “Jailed” list for ones that are not bending backwards to be compliant
— Roman Semenov in Dubaiï¸ (@semenov_roman_) April 15, 2022
Now make the list of “Incarcerated” for those who do not adhere to compliance.
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