Tornado Cash, a popular Ethereum mixer that helps obfuscate cryptocurrency transactions, has said it will block crypto addresses that are sanctioned by the Office of Foreign Assets Control (OFAC), the law enforcement agency of the US Treasury Department.
This news means that crypto wallet addresses identified by OFAC as sanctioned will no longer be able to use Tornado Cash (TORN) .
“Maintaining financial confidentiality is necessary to preserve our freedom, however this should not come at the cost of non-compliance,” Tornado Cash wrote on Friday.
Tornado Cash said it uses the Chainalysis oracle — a smart contract that checks if a crypto wallet address has been included in a sanctions list — to block crypto addresses that fall under OFAC sanctions.
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The news comes a day after the Treasury Department said North Korean hacker group Lazarus was involved in stealing $625 million from Axie Infinity’s Ronin Bridge. The department has added an Ethereum address to its sanctions list allegedly related to the Ronin exploit, and Tornado Cash has now blocked the address.
Tornado Cash entered into a contract to block sanctioned addresses over a month ago. So far, the contract has created three transactions to block a total of 24 addresses. The address associated with the Ronin exploit was added on Thursday.
Co-founder of Tornado Cash Roman Semenov said that changes are made only at the frontend, that is, at the level of its decentralized application (dapp).
“Smart contracts are immutable,” Semyonov tweeted on Friday. Protocol (smart contracts onchain) and interface (dapp) are two different things.”
In other words, he meant that Tornado Cash itself cannot be shut down by sanctions.
Last year, decentralized protocols Uniswap (UNI) and 1inch (1INCH) also blocked some services on their interface. Uniswap delisted many tokens that looked like securities or derivatives offerings, while 1inch began filtering US IP addresses.
As for Tornado Cash, some people on Twitter have criticized the move, suggesting address sanctions don’t mean attackers can’t use its services. According to them, all they need to do is send their cryptocurrency to other unauthorized addresses and still use Tornado Cash.
Tornado Cash declined to comment on journalists’ inquiries about the story.
