Recently, it was declared by Tornado Cash that the platform was utilizing oracle contracts developed by Chainalysis to stop the wallet addresses that are sanctioned on the behalf of the U.S. OFAC (Office of Foreign Assets Control). The respective move is witnessed following the U.S. Treasury Department accused Lazarus Group (a cybercriminal from North Korea) to be the culprit in the recent hack of Ronin Bridge with the plundered amount of nearly $600M.
As reported by Elliptic (a blockchain analytics company), up to $80.3M worth of ETH (Ether) was sent by the hackers via Tornado Cash. The team of Tornado Cash revealed that upholding financial privacy counts to be a primary focus of the platform to preserve the freedom thereof nevertheless it should not be achieved in return for non-compliance.
Tornado Cash has a position of being a well-known crypto mixture utilized to create obfuscation in the tracking of transfers to ensure privacy. The validation of whether the address of a crypto wallet has been a part of a sanctions designation made on the behalf of the United States, the United Nations, or the European Union, would be done by the Chainalysis Sanctions Oracle. Nonetheless, Roman Semenov (the co-founder of Tornado Cash) later made it clear that the instrument just halts the access to the DApp (decentralized application) interface rather than to the core smart contract.
Some traces have been found indicating the involvement of Tornado Cash in many scandalous decentralized finance-related operations. In Wormhole’s exploit of nearly $375M in February, the malicious actors trialed with Tornado Cash utilizing the robbed funds. In the very month, the team of LooksRare additionally in part utilized Tornado Cash to withdraw cash of more than $30M in crypto.
A recent phishing attack over Rare Bears Discord that exploited almost $800 thousand in NFTs (non-fungible tokens) additionally witnessed hackers sending funds via Tornado Cash. Some reports also arose noting that the funds from an exploit of $33M in Crypto.com were laundered through the DApp. Nonetheless, it seems that a considerable association of the protocol of Semenov was with the accused illegal operations.
The likely result of the non-compliance with the rules set by the regulatory authorities could take into account the blocking of the access to the individuals that have been blacklisted along with some imprisonment sentences.
James Thompson