Tornado Cash DAO Goes Offline Following Blacklist

The DAO website for sanctioned crypto mixer Tornado Cash appears to no longer be operational. According to social media reports, this is also true for the platform’s Discord server.

DAO Website Stops Going Through

Earlier this week, the United States Treasury Department’s Office of Foreign Asset Control imposed a sanction on the Ethereum-based protocol. Since then, the platform has seen some of its resources become inaccessible. Additionally, various entities have begun distancing themselves from Tornado Cash’s services.

Hence, the platform’s DAO has been occupied with brainstorming ways to get around its blacklist status and stay afloat. According to circulating reports, the DAO forum went offline shortly after a community vote. The proposal addressed whether to add the DAO members as signatories to the treasury’s multi-signature wallet.

Although the wallet reportedly manages assets worth roughly $22 million, the proposal passed unanimously. The author of the proposal claimed switching to a 4 of 6 system would ease the process of approving transactions. Should something happen to 2 signers the writer noted, they would still be able to access the community fund. 

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Soon after, however, the governance forum link began displaying an error message. The community discord server also went offline, leading visitors to an invite error message. There have been no clear pointers to what disabled either forum.

Effects of the Ban, a Tornado Cash Crackdown?

Ongoing speculations have suggested that this is the latest in a series of actions against the mixer from various entities. Right after the sanctioning announcement, Tornado Cash co-creator Roman Semenov revealed that developer platform Github had frozen his account. 

Later on, Tornado Cash stated in a tweet that personal Github accounts for its contributors had met the same fate. Additionally, trading platform dYdX shared that it had suspended some user accounts that had previously interacted with the privacy platform. Node providers Alchemy and Infura.io acted similarly, barring remote procedure call requests to Tornado Cash. 

Here's the list of Tornado Cash resources that were banned

– Tornado Cash @GitHub organization
– personal @GitHub accounts of TC contributors
– all $USDC on Tornado Cash contracts @circlepay
– @infura_io RPC
– @AlchemyPlatform RPC
– https://t.co/SHvgEjTOMV domain @eth_limo

— ?️ Tornado.cash ?️ (@TornadoCash) August 9, 2022

Centralized stablecoin network Circle also moved to disconnect itself from the flagged platform. Circle CEO Jeremy Allaire shared that the firm had frozen assets worth over 75,000 USDC on 44 Tornado Cash addresses.  

Finally, on Friday Dutch authorities arrested Tornado Cash software dev Alexey Pertsev. Netherlands’ financial crime agency accused the 29-year-old of facilitating money laundering on the platform. 

Banning Software; a First for the US

Industry participants are yet to fully come to terms with the sanction. Adjunct professor at Columbia Business school, Omid Malekan shared his thoughts:

For the first time ever, the U.S. government has criminalized interacting with software.”

Omid acknowledged the Treasury’s concerns saying there is proof bad actors have employed Tornado Cash to launder funds. However, the professor who also teaches about crypto and blockchain pointed out that the platform does have valid uses. According to Omid, the US has taken a significant step away from its typical practice of sanctioning people, companies, and governments.

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The platform’s Telegram Channel remains active at the moment.