U.S. Secretary of State Antony Blinken said on Aug. 8 that the country sanctioned Tornado Cash (CRYPTO: TORN), a decentralized application on the Ethereum (CRYPTO: ETH) blockchain that allows the anonymous transfer of Bitcoin (CRYPTO: BTC).
The reasoning behind it, as well as how it was executed, has angered the crypto community and may be a precursor of a serious government crackdown on the industry.
Let’s look at the reasons behind the sanction and what it could signify for the future of decentralized finance.
What Is Tornado Cash?
Tornado Cash, launched in 2019, is one of the first fully decentralized apps on Ethereum to offer private transactions.
It accomplished this by first accepting user payments, combining them into a single address and allowing users to withdraw funds to a second Ethereum address.
Due to the mixture of Ethereum addresses, it was impossible to determine who the original owner was.
Tornado Cash offered a way for people who valued their privacy to invest in and utilize cryptocurrencies without having their transactions automatically made public on Ethereum, which makes every transaction public by default.
Motives Behind The Sanction
With Tornado Cash’s assistance, more than $7 billion in user funds have already been mixed.
Despite the fact that the majority of these transactions were fully authentic and lawful, there have been some major hacks that have used Tornado Cash to launder stolen money.
For instance, the Axie …
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