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Crypto Mixers and Money Laundering
A little over a day after the U.S. Treasury Department placed Tornado Cash on the blacklist for aiding in money laundering, Ethereum co-founder Vitalik Buterin said he used it to contribute to Ukraine. Jeff Coleman, a co-founder of Counterfactual, claimed in a tweet that such a donation is an excellent illustration of a legitimate desire for financial privacy that Tornado Cash may satisfy. In response to Coleman’s posting, Buterin made some remarks.
Coleman stated that you might not want the Russian government to have complete information of your conduct, even if the government where you live is in full favour. On Monday, the Office of Foreign Assets Control (OFAC) of the Treasury Department added Tornado Cash to its list of Specially Designated Nationals, thereby prohibiting all individuals and businesses from utilizing the service.
Since its founding in 2019, Tornado Cash, according to the OFAC, has laundered more than US$7 billion in cryptocurrencies. Services called crypto mixers enable users deposit cryptocurrency into a sizable pool and then withdraw the same amount, less a charge, to several wallets to hide the origins of the original tokens.
Crypto as a Means to Crowdsource Donations
Some, like Coin Center director of research Peter Van Valkenburgh, have even gone so far as to say that the restriction is unconstitutional. Crypto mixer proponents argue that not all funds that move through the services are illegal. In a keynote at ZCON3, Valkenburgh presented the case that both the political use of otherwise lawful transactions to protect one’s privacy and the prohibition of software release are illegal since they restrict expression.
People in both Russia and Ukraine started using cryptocurrencies as a store of value after Russia’s invasion since the currencies of both countries saw a sharp decline. As the nation’s financial system is severely stressed, activists and volunteer organisations within Ukraine have started utilizing cryptocurrencies to crowdsource donations to help fund a defence against the Russian invasion.
President Volodymyr Zelenskyy of Ukraine authorized cryptocurrencies in March after recognising its potential to aid the country’s humanitarian and defensive endeavours. Because the Russian government, where Buterin was born, was already aware of his views on Ukraine, he claimed that his goal in utilizing the service was to safeguard the receivers rather than himself.
The amount of money delivered to crypto mixers reached an all-time high of US$51.8 million in April of this year, according to a new analysis on them. Before the OFAC’s decision, Kim Grauer, Head of Research at Chainalysis, stated in an interview with Forkast last week that she thought Congress would eventually take action.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
