- Why crypto mixers are needed
- The most popular mixer has come under persecution
- Will Tornado Cash be available?
According to the US Attorney’s Office for the Southern District of New York (SDNY), two founders of Russian cryptocurrency mixing service Tornado Cash have been indicted.
Roman Storm and Roman Semenov are now officially charged with conspiracy to violate sanctions and conspiracy to conduct an unlicensed money transmitting business.
Storm was arrested in Washington on Wednesday, but Semenov still remains at large. A third co-founder, Alexey Pertsev, who is not named in the filing, is fighting legal repercussions in Amsterdam over his role in Tornado Cash.
Why crypto mixers are needed
For a consideration, Mixers allow customers to hide the origin of their crypto assets during transactions. Mixing coins protects counterparties from numerous risks, including blocking on exchanges. The latter track the history of bitcoins and demand the “purity” of coins, despite the fact that the recipient is not responsible for the past circulation of the received cryptocurrency. Nevertheless, many believe that mixers are a tool exclusively for criminals and scammers.
The most popular mixer has come under persecution
Tornado Cash was created in 2019 based on open-source research by the Zcash team. Semenov emphasized the decentralized nature of the platform, saying in a January 2022 interview with CoinDesk that the protocol was specifically designed to be “unstoppable,” adding: “there’s not much we can do in terms of facilitating investigations because the team doesn’t have much control over the protocol.”
«Публично заявляя, что предлагают технически сложную услугу конфиденциальности, Шторм и Семенов на самом деле знали, что помогают хакерам», – заявил в среду прокурор США Дамиан Уильямс.
“By publicly claiming to offer a technically sophisticated privacy service, Storm and Semenov actually knew they were helping hackers”, US Attorney Damian Williams said Wednesday. OFAC imposed sanctions against Tornado Cash in August 2022 and from then on, US citizens and businesses were banned from using its service.
Along with the SDNY, the Federal Bureau of Investigation, the Department of Justice, and the Criminal Investigation unit of the Internal Revenue Service have also filed charges.
The community has actively stood up to defend the crypto mixer as open source software. Coinbase CEO Brian Armstrong has personally joined the plaintiffs’ demands against the Treasury Department. On his blog, he shared a post on the topic. The following quote from Brian explains why sanctions against crypto mixers should not be left unchallenged, “Sanctioning open source software is like permanently shutting down a highway because robbers used it to flee a crime scene. It’s not the best way to solve a problem. It ends up punishing people who did nothing wrong.”
Will Tornado Cash be available?
The mixer runs on smart contracts, which are inherently decentralized. Therefore, shutting down the site and destroying the code in the public space cannot stop the mixer from operating. All in all, the US simply set a precedent of blaming decentralized finance, which showed that you can punish developers, but you can’t stop a service.
A cryptography professor at Johns Hopkins University has published an “archive fork” of the Tornado Cash source code on GitHub. He intends to keep the source code of the privacy protocol for research purposes rather than deployment. He said his students used such code to explore concepts related to cryptocurrency privacy and zero-disclosure technology. And it is far from the only fork circulating online.
Mixers running on the Tornado Cash smart contract can currently be found online, yet one cannot be sure that no malicious changes have been made to their code. However, since the mixer is a smart contract, it can be deployed on one’s own server, although due to the peculiarities of the program’s operation, which requires a fairly large number of users to obfuscate, this is not entirely advisable.
