The crypto industry, rooted in privacy and autonomy, was catalyzed by the Bitcoin white paper released after the 2008 financial crisis. Sanctioning of Tornado Cash by the U.S. Treasury raised questions about the sanctioning of code rather than individuals. Privacy advocates contend that users should have the autonomy over digital cash similar to physical cash. Following the sanctions, the Department of Justice indicted Tornado Cash creators for knowingly aiding money laundering, highlighting the complex issues faced by the crypto sector amidst regulatory challenges.
The elusive Satoshi Nakamoto released the Bitcoin white paper in the wake of the 2008 financial crisis, after all. Even as Wall Street swallows blockchain technology whole, the core is still a spirit of disintermediation.
OFAC's action created novel questions, such as whether a piece of code, rather than a person or organization, can be sanctioned. It also drew the ire of privacy advocates, who argued that internet users should have the right to own and send digital cash without government interference.
A year after the sanctions, the Department of Justice brought charges against the creators of Tornado Cash, with one, Roman Storm, arrested in the United States. This was a tricky case for the crypto industry to get behind.
The DOJ's indictment made clear that the founders knew their software's main utility was to help money launderers, including North Korea's Lazarus Group, and they were earning millions of dollars off the platform through their own proceeds.
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