Tornado aftermath | Is Celebrities Forced to Accept Funds Considered a Crime? Vitalik: Donated to Ukraine with Tornado Before

The issue of Tornado has sparked a lot of discussion, with many emphasizing that sanctioning open-source software is unconstitutional. While USDC is widely adopted in DeFi, its full cooperation with sanctions is seen as contradictory. Some anonymous users have sent 0.1 ETH to numerous celebrities via Tornado to demonstrate the difficulty of enforcing sanctions.

The U.S. Office of Foreign Assets Control (OFAC) placed Tornado.cash's mixing protocol-related addresses and websites under sanctions on the second day, which continues to generate a lot of discussion on Twitter. Apart from measures taken by relevant entities to comply with sanctions, there are accusations of unconstitutionality against OFAC.

Since its inception in 2019, OFAC emphasizes that the mixing protocol has been extensively used by criminals for money laundering, with a value exceeding $7 billion. Under the leadership of OFAC, the impact includes:

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1. Tornado.cash's open-source code was removed, and the founder's Github account was disabled.

2. The issuer of USDC blocked assets related to the addresses, prohibiting Circle accounts from interacting with sanctioned addresses.

3. Following the second point, this could lead to protocol users being unable to withdraw assets, while issuers of centralized assets like USDT and WBTC have not made a statement.

4. Using Tornado.cash or interacting with sanctioned addresses could potentially violate the law, leading to civil fines in the millions of dollars and a maximum of 30 years in prison.

Code is Speech, OFAC Violates Free Speech

According to the first point, many influential figures on Twitter have expressed similar views that the OFAC sanctions are unconstitutional. This includes:

Blockchain policy advocacy group Coin Center: The policy prohibits all Americans from using specific open-source software.

Electronic Frontier Foundation: According to the Bernstein v. United States case, the court ruled that the government preventing the publication of software source code is unconstitutional.

Brownie developer: This is much worse than just sanctioning a website; it is unconstitutional.

Bankless co-founder Ryan Adams: Why should Tornado users be afraid? The protocol is composed of code, and code is language. OFAC's actions are equivalent to restricting free speech and violate the First Amendment of the U.S. Constitution.

Furthermore, Tornado has confirmed to the media outlet Decrypt that the protocol code has been removed from Github, but the smart contracts still run on Ethereum, and sanctions do not change anything.

Circle: Complying with Sanctions

USDC issuer promptly blocked sanctioned addresses and froze related USDC assets at the time of the incident. CEO Jeremy Allaire stated:

We hope all responsible digital asset service providers will follow our policy and prohibit interaction with the relevant addresses.

Jeremy Allaire not only elaborated on this on Twitter but also published a blog post on the Circle website.

Circle's CFO had previously stated that they planned to go public in the fourth quarter, while dForce founder Yang Mindao pointed out that Circle's actions were due to impending listing pressure, restricting users' freedom to use basic services, which contradicts Circle's business logic.

Forced Receipt of Tornado Funds Equal to Crime?

Aave developer pointed out that an anonymous user sent 0.1 ETH through Tornado to several celebrities, including:

• PUMA
• Digital artist Beeple
• Popular YouTuber Logan Paul
• Tonight Show host Jimmy Fallon
• Coinbase CEO Brian Armstrong

Even the Ukraine donation address received funds, raising the question of whether these celebrities forced to interact with Tornado will be considered in violation of the law?

Cybersecurity company PeckShield observed that around 440 addresses received 0.1 ETH from the sanctioned Tornado Cash address, including many celebrities: Ethereum founder Vitalik Buterin, TRON founder Justin Sun, NFT artist Beeple, Coinbase founder Brian Armstrong, Binance address, FTX address, etc.

Some Twitter users even mentioned that their wallet addresses were blocked by NFT trading platform OpenSea. They suspect this could be due to the address's involvement in Tornado Cash's anonymity mining.

Vitalik: Tornado Meets User Privacy Needs

Counterfactual co-founder Jeff Coleman discussed the issue and pointed out that donating to Ukraine is a case where financial privacy needs exist:

Even if your local government fully supports Ukraine, you may not want the Russian government to know your every move in supporting Ukraine.

Ethereum founder Vitalik Buterin replied that he used Tornado to donate to Ukraine for this reason. He emphasized the need for users to have more privacy in transactions, stating that he doesn't care as the Russian government already knows his stance on supporting Ukraine.

Uniswap Founder: This Is Not Wise Law

Uniswap, which has previously cooperated with regulatory restrictions by limiting frontend web functions, had its founder Hayden Adams share his opinion on the matter. He stated that privacy is crucial for societal function and security. Arguing against privacy for the sake of illegal activities is absurd and dangerous; it reminds him of those who wanted to make cryptography illegal.

Hayden Adams further mentioned that sanctioning immutable smart contracts, rather than individuals or organizations, raises serious free speech issues and sets a bad precedent. Attacking a company through local laws and regulations is less helpful than advocating for sensible laws or policies.