Crypto Community Responds to Tornado Cash Sanctions, Privacy Advocates Say 'There Are Many Legitimate Reasons to Seek Financial Anonymity'

The U.S. government banning the ethereum mixing service Tornado Cash and the enforcement that has followed has the crypto community in an uproar about the event. A large number of crypto and privacy advocates have spoken out against the actions the government has taken so far, and the nonprofit advocacy group Fight for the Future calls the ban “a threat to the future of financial privacy.”

Advocacy Group Fight for the Future Says US Government Threatens Financial Privacy — ‘There Are Many Legitimate Reasons to Seek Anonymity in Financial Transactions’

On August 8, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned virtual currency mixer Tornado Cash. The U.S. government claims that the application was used to allegedly “launder more than $7 billion worth of virtual currency since its creation in 2019.” Following the ban, Github contributors were suspended from the software repository platform and on August 12, the Tornado Cash Discord server was deleted.

The same day, Dutch law enforcement revealed that the Fiscal Information and Investigation Service (FIOD) arrested a 29-year-old unidentified person that is accused of developing Tornado Cash. A report stemming from The Block Crypto’s Yogita Khatri says that the unknown developer is Alexey Pertsev, according to statements his wife made after the arrest. “My husband didn’t do anything illegal,” the suspect’s wife told the reporter on Friday. Meanwhile, the entire crypto community and privacy advocates are upset with the U.S. government’s actions.

“Welcome to the war on code,” podcast host Cobie said on Friday.

The nonprofit advocacy group Fight for the Future published a statement about the U.S. government’s actions against Tornado Cash. “Already, the Internet is feeling the chilling effects of this choice: the open source code used to run Tornado.cash has been taken down from Github. And unfortunately, it seems that such an effect is exactly what the U.S. government was seeking,” Fight for the Future’s blog post about the subject explains. Fight for the Future adds:

Anonymity is not a crime, and there are many legitimate reasons to seek anonymity in financial transactions. Privacy tools are important to, for example, activists in authoritarian states where revealing financial information could get someone jailed or executed.

‘Same War, Different Battle’

Crypto developer and the co-founder of Aragon Luis Cuende said: “I’m short of words. I’m short of breath. They detained him for writing code. Writing code. These terrorist organizations called traditional nations must be dismantled.” The Tornado Cash conversation struck a nerve with nearly every vocal member of the crypto community. “Let’s remember that the export/use across borders of encryption itself was illegal in the United States until 1996,” Shapeshift founder Erik Voorhees said. “Same war, different battle,” he added.

Others mocked the U.S. government for banning Tornado Cash as numerous financial giants have been accused of helping money launderers, but no bank CEOs have been arrested. “Thankfully I have never used Tornado Cash to launder money,” one Twitter user remarked in jest. “I use Deutsche Bank like a normal person,” the individual added.

The attorney Jake Chervinsky told his followers that everyone should be “closely watching the situation in Amsterdam, where a Tornado Cash developer has been detained. It’s unclear if there are allegations of illicit conduct unrelated to writing code. If not, this threatens to be the start of Crypto Wars II,” Chervinsky wrote.

Larry Cermak Asks: ‘Why Is Only Tornado Cash Affected?’

During the last 24 hours, the Tornado Cash subject has been a very topical conversation stretching far and wide on social media. “Tornado Cash developer being arrested by Netherland’s FIOD is concerning news,” podcast host Stephan Livera wrote on Friday. “Imagine if road builders were being arrested ‘because criminals use them?’ Or home curtain installers? Wanting privacy should not be considered a crime.

The Block Crypto’s VP of research Larry Cermak wondered why other crypto privacy techniques have not been targets of the U.S. government. “I think an interesting question to ask now is why is only Tornado Cash affected and other privacy projects like Coinjoin, Monero, and even Zcash are still fine?” Cermak tweeted. “Is that just because Tornado was used the most recently or are there some other factors playing a role here? Just odd.” The crypto researcher added:

Regardless, the ability to write open source code and [the] average user having privacy are among the most important principles in crypto. We need to do all we can to protect the devs that put their security on the line.

Fight for the Future explains that people who don’t want their financial history “surveilled by governments, corporations, stalkers, or other bad actors is a legitimate reason to seek privacy-preserving technologies online.” The advocacy group’s blog post concludes by stating:

We ask that the Treasury focus more carefully on targeting bad actors — rather than attempting to criminalize building and using privacy tools or the simple act of writing or running open source software code.