The Ethereum mixer Tornado Cash announced that it is using a tool developed by compliance firm Chainalysis to block the U.S. Office of Foreign Assets Control (OFAC) sanctioned addresses from using the decentralized applications (dApp).
One of Tornado’s founders, Romanov Semenov however clarified on Twitter later that the ‘blocking’ only applies to the user-facing dapp and not the primary smart contract.
The move is taken in view of ‘maintaining financial privacy’ while also taking care of global compliance as there have been cases of hackers using the Tornado Cash privacy tool to wash illegal crypto funds from the hacking.
For instance, recently the Ronin Network suffered the largest DeFi attack in history. The attacker moved around 1,400 Ether to Tornado Cash. However, the Treasury Department added the Ethereum address to its sanctions list, and Tornado Cash is taking care of global compliance by blocking the listed addresses.
It is worth pointing out that The Chainalysis oracle is a smart contract that validates if a crypto wallet address has been listed in a sanctions designation. Chainalysis launched the two sanctions screening tools just recently.
Speaking of OFAC, it is a U.S. government entity that enforces economic sanctions to safeguard national security and foreign policy. It keeps records of crypto wallets tied to sanctioned individuals and entities.
