Concerned about being investigated? Arbitrum DAO withdraws proposal to fund Tornado Cash lawsuit exceeding one million dollars

The Block reported that Arbitrum DAO revoked a proposal yesterday to fund legal fees for Tornado Cash, amounting to around $1.2 million, citing potential legal risks. Despite this, sources revealed that the funds are still planned to be allocated through other channels.

Arbitrum DAO Halts Funding Proposal for Tornado Cash

Reports indicate that on March 7th, the Arbitrum DAO initiated a community vote regarding the criminal charges faced by Tornado Cash developers Roman Storm and Alexey Pertsev from U.S. law enforcement, questioning the provision of financial support to them.

It is reported that the proposal, put forth by community member Joseph Axisa, aimed to provide the company with 200,000 to 600,000 ARB tokens, equivalent to $400,000 to $1.2 million, for adequate legal defense funds. The donated tokens were expected to be sent to WeWantJusticeDAO, a group specifically handling Tornado Cash legal matters, where any excess budget could be used for promoting privacy protection technology to enhance understanding of the technology and developers' legal responsibilities.

However, the proposal was previously deleted, with no exact deletion time known. Insiders claimed:

At the request of the proposer, the proposal was deleted due to uncertainty about whether the suggested donation might pose legal risks.

Insiders: Considering Alternative Funding Channels

Nevertheless, according to The Block citing insiders, the Arbitrum DAO still plans to provide assistance to Tornado Cash's legal proceedings through other means, including sending funds to non-profit organizations focused on crypto policy like Coin Center. They revealed:

A new version of the funding proposal may be released on the ArbitrumDAO forum this week.

Arbitrum DAO Not the First Concerned Funding Party

Furthermore, Arbitrum DAO is not the first funding party worried about potential legal risks. Last month, crowdfunding platform GoFundMe also canceled fundraising activities related to Tornado Cash legal fees, acknowledging that such fundraising could expose its employees or users to potential liability and threats.

The money we sent to @rstormsf was cancelled by @gofundme – they shut it down.

I thought this might happen but am still surprised.

Good thing we have an uncensorable money system so we can still fund civil liberties like the right to a fair trial.

Resending $10k with crypto. https://t.co/5Ud4ELiaK5 pic.twitter.com/glRXwtXPBw

— RYAN SΞAN ADAMS – rsa.eth (@RyanSAdams) February 15, 2024

Review of Tornado Cash Regulatory Events

In August 2023, the U.S. Southern District of New York's Attorney's Office charged Tornado Cash co-founders Roman Storm and Roman Semenov, among others, subject to U.S. sanctions, with conspiring to launder money, violating sanctions, and operating an unauthorized money transfer business:

Tornado Cash, as a notorious cryptocurrency mixer, violated U.S. sanctions and intentionally facilitated money laundering activities, with criminal proceeds exceeding $1 billion.

Tornado Cash Co-Founders Arrested, U.S. Justice Department: Indirectly Assisted North Korea in Developing Nuclear Weapons

The first two charges carry a maximum sentence of 20 years in prison, while the latter could result in up to 5 years of imprisonment.

To date, developers Pertsev and Storm were respectively arrested by the FBI in August 2022 and August 2023, while Semenov remains at large.

Prior claims by Tornado Cash supporters that it merely provides decentralized fund transfer software and does not actively engage in fund transfers were subsequently dismissed by the courts.

Tornado Cash Supporters' Appeal Rejected, U.S. Judge: Treasury Department Did Not Exceed Authority