- Manta Network founder Shumo Chu thinks the Tornado Cash ban might affect all web3 protocols.
- Tornado Cash was banned in suspicions of having ties to North Korean hackers that laundered billions of dollars in crypto.
- Tornado Cash is said to have been responsible for the laundering of over $7 billion.
According to a recent article published by Cointelegraph, Shumo Chu, the co-founder of Polkadot-based Manta Network, which is a layer-1 privacy protocol that enables private transactions in decentralized finance (DeFi), has voiced concern that the stringent sanctions against Tornado Cash could have a knock-on effect on all Web3 protocols, especially those that provide privacy.
Tornado Cash was sanctioned by the United States Treasury on August 7, 2022, because of suspicions that it assisted North Korean hackers in laundering billions of dollars worth of cryptocurrency.
The revelation was verified by the Office of Foreign Asset Control (OFAC), a regulatory office under the US Treasury responsible for implementing sanctions. Because of this, it is now illegal for companies and users of cryptocurrencies in the United States to deal with the platform. That occurred when Dutch authorities detained a Tornado Cash developer whom they believe was engaged in the laundering of illicit funds.
Chu acknowledged he understood why Tornado Cash was banned; nonetheless, he challenged the regulators’ comprehension of how decentralized systems that are built on open-source code can be literally placed and run anywhere.
It’s quite possible regulators just don’t understand distributed blockchain technology and how open source code can be anywhere. They may have actually thought Tornado Cash developers deliberately helped North Korean hackers. They are banning the protocol instead of some people. Essentially this is a piece of code from the Ethereum blockchain.
Since its inception in 2019, Tornado Cash is said by the Treasury to have been responsible for the laundering of over $7 billion worth of cryptocurrency.