tl;dr
Roman Storm, co-founder of Tornado Cash, is seeking to have charges against him dropped following the dismissal of sanctions against his software. In his motion to dismiss, Storm cites a recent Fifth Circuit ruling that recognized the inability to classify autonomous software as property, as well as...
Roman Storm, co-founder of Tornado Cash, is seeking to have charges against him dropped following the dismissal of sanctions against his software. In his motion to dismiss, Storm cites a recent Fifth Circuit ruling that recognized the inability to classify autonomous software as property, as well as the lack of control over the software's proceeds, negating potential money laundering charges.
Tornado Cash, a decentralized coin mixer, aims to anonymize crypto deposits for user privacy. The recent ruling has been positively received by privacy advocates, although some suggest further government regulation of cryptocurrencies, including targeting Ethereum network validators.
In Storm’s Dec. 18 motion to dismiss, he cites the recent Fifth Circuit ruling that the Treasury's Office of Foreign Assets Control (OFAC) overstepped by sanctioning Tornado Cash’s immutable smart contracts. The ruling recognized that autonomous software that no one controls cannot be classified as property.
“Tornado Cash is difficult to control due to the immutable nature of smart contracts," Stephen Ajayi, dApp Audit Technical Lead at blockchain cybersecurity firm Hacken, told Decrypt. "It is fully decentralized, globally accessible, and hard to censor on Ethereum, which is the core principle of decentralization.”
Tornado Cash is a decentralized coin mixer created to preserve crypto users' privacy by anonymizing deposits through cryptography. The service has seen inflows from wallets associated with major hacks. Due to such transactions—including some allegedly linked to North Korea—the U.S. Treasury Department sanctioned Tornado Cash in early August 2022.
Privacy advocates reacted positively to the recent Fifth Circuit ruling. Anoop Nannra, CEO of web3 intelligence and security firm Trugard Labs, recognized that “this is a step in the right direction.”
While privacy advocates welcome the ruling, the measures had limited impact. Still, some believe that the government should attempt to tighten its grip on cryptocurrencies further. Irfan Shaik, founder of blockchain auctions project Interstate, suggests a more extreme solution. According to him, regulators could aim for the Ethereum network by regulating how its validators act.
Still, data from censorship tracking service Censorship.pics shows that Ethereum block builders censoring transactions dived from just under 70% this summer to below 5%.