Tornado Cash, a coin mixing tool for the Ethereum blockchain, said today that it uses a tool from blockchain tracking firm Chainalysis to prevent addresses sanctioned by the U.S. government from using the privacy app.
“Maintaining financial privacy is essential to preserving our freedom, however, it should not come at the cost of non-compliance,” the firm wrote.
Tornado Cash works by “breaking the on-chain link between source and destination addresses.” Deposits go into a smart contract, where they are mixed around with other deposits, and then can be withdrawn by a new address. In short, it’s more private.
Tornado Cash uses @chainalysis oracle contract to block OFAC sanctioned addresses from accessing the dapp. Maintaining financial privacy is essential to preserving our freedom, however, it should not come at the cost of non-compliance.https://t.co/tzZe7bVjZt
Though the announcement is from today, the policy may not be new. CoinDeskreported back in January—before the Russian invasion of Ukraine sent sanctions into high gear—that Tornado Cash was complying with the Office of Foreign Assets Controls, which has a blacklist of crypto wallets from suspected terrorists, criminals, and individuals linked to certain authoritarian governments.
To understand how the whole process works, imagine a club that you want to get into. Let’s call it…”Tornado.” To comply with a government mandate prohibiting anyone underage from accessing clubs, it puts a bouncer at the door and searches…