The US Department of Treasury banned Tornado Cash, a well-known decentralised application, or DApp, that is used to obscure the history of past crypto transactions, on August 8. The government believes that the website “launders the profits of cybercrimes,” hence US residents are no longer permitted to access it.
Dune Analytics, a crypto data aggregator, reports that Circle, the creator of the USD Coin (USDC) stablecoin, has also frozen roughly 75,000 USDC of funds tied to 44 Tornado Cash accounts. These addresses were also detected and banned on August 8 on the Specially Designated Nationals and Blocked Persons (SDN) list kept by the U.S. Office of Foreign Assets Control.
No U.S. individuals or businesses have access to the USDC and Ethereum smart contract addresses for the SDN list’s digital currency mixer. Penalties for willful non-compliance range from $50,000 to $10,000,000 and include 10-to 30-year prison sentences. Tornado Cash’s smart contract addresses are now holding roughly $437 million in stablecoins, ether, and wrapped bitcoin (WBTC).
The new Tornado Cash penalties are prevalent for people and organisations in the United States, claims anonymous DeFi specialist BowTiedIguana. Simple actions like utilising Gitcoin to make donations, contributing to the project, using or downloading its software, visiting its website, and entering or withdrawing from smart contracts might all be considered violations.
On the layer of an Ethereum smart contract, the entities that control USDC and Tether have the authority to halt stablecoin transfers to and from Tornado Cash.
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