In reaction to the sanctions, organisations such as Coin Center have defended the mixer, stating that the smart contract code is not a sanctionable entity.
It is unknown whether privacy coins such as Monero would face similar restrictions in light of this new precedence. A hard fork upgrade on August 13 made it more challenging to trace Monero transactions.
Contrary to the idea that all bitcoin transactions are private by nature, the data on a blockchain is public, and transactions may be traced. Crypto mixers and privacy coins were established to facilitate the open financial systems anonymity. But each faces unique uphill struggles.
A crypto mixer, also a tumbler or blender, is a transaction mixing tool or service anybody can use to conceal a crypto wallets source of funds. These technologies were initially built for bitcoin in 2013, but once solutions like Tornado Cash made them available for a range of cryptocurrencies, they became a popular alternative to privacy coins.
Blender.io was the first custodial mixer sanctioned by the Office of Foreign Assets Control of the US Department of the Treasury (OFAC). It didnt garner the same attention as Tornado Cash since it belonged to the pattern of prior punishments against individuals and organisations.
Tornado Cashis an Ethereum-based crypto mixer that mixes ETH and ERC-20 tokens using non-custodial smart contracts. Through a zero-knowledge proof contract, users contribute funds to smart contract addresses that arrange them by the amount and efficiently mix the deposits.
For instance, suppose you wish to combine 11 ETH. Because deposits are categorised by amount, you send 10 ETH to the 10 ETH mixer and 1 ETH to the 1 ETH mixer. Once funds are given to each mixer, the zero-knowledge proof verifies that you provided a deposit to each one without revealing which one was initially yours. This provides the equivalent of a withdrawal authorisation slip for each mixer.
On August 8, 2022, OFAC added a list of Tornado Cash-related addresses to the same list of sanctioned addresses, including Blender.io. OFAC used the same language for Blender.io as it did for Blender.io, but failed to recognise their significant custody distinction. Coin Center asserts that Tornado Cash has two distinct components: the decentralised group of governing members, Tornado Cash Entity and the immutable smart contract coin mixers Tornado Cash Application.
The Tornado Cash Entity cannot modify or update the Tornado Cash Application due to the destruction of the original developers administrative keys. Smart contracts exist so long as the Ethereum blockchain is operational. Therefore, even if the Tornado Cash website is down, anybody can develop a replacement front end or communicate with the smart contracts directly that gives users access to the same mixers.
The issue is that OFAC included these immutable addresses for smart contracts on its list of penalties. Consequently, there are currently innocent Americans with funds in these mixes. If they attempt to transfer the funds, they will violate the law and face penalties. And because the application is not a legal business, it cannot petition OFAC to remove the sanctions.
Coin Center claims that OFAC did not cite the legal authority to add the smart contract addresses to the sanctions list since the Tornado Cash Application is not an organisation, triggering constitutional concerns. In response to OFACs notification, firms agreed to filter individuals associated with these IP addresses. Aave, a decentralised financial application, prohibited any user that received Tornado Cash payments in a dust assault.
Privacy coins are digital currencies that employ various techniques to conceal IP addresses, wallet balances, and the movement of transactions. Z-cash and Monero are the two most popular privacy-centric cryptocurrencies. Z-cash is a cryptocurrency that protects transaction data primarily through zero-knowledge proofs. They vary from crypto mixers in transforming financial privacy into a product rather than a benefit.
Since this early setback, Z-cash has never returned to the highs of the 2017 bull cycle and presently stands second in total market capitalisation behind Monero. While Monero prices were able to hit 2017 levels in 2021, they could not surpass their all-time high.
Monero is a privacy-centric cryptocurrency that provides financial anonymity via privacy-enhanced blockchain encryption. Every transaction uses one-time stealth addresses to conceal the balances of public addresses.
The protocol for Monero was improved on August 13. The earlier version of Monero provided a layer of anonymity, but its entire untraceability was questionable. In 2018, detractors said that the process of elimination might discover the signature rings inputs. And in 2021, CipherTracer purportedly patented a transaction-tracking technology used by the Department of Homeland Security (DHS).
Even if CipherTracer uncovered actual flaws, the scope of their repercussions remains unknown. They did not reveal their tactics or degree of success. Since it prevented CipherTracer from being accessed by anybody unwilling to pay, this earlier version nevertheless provided some financial anonymity.
In Canada, efforts were undertaken to trace the sources of funding for the trucker freedom convoy. The authorities sanctioned 34 cryptocurrency wallets associated with the movement, and Monero addresses were included on that list.
By raising the number of transactions in a ring signature, the Monero team expect this upgrade will solve any possible security loopholes. Even if the anticipated Monero chain enhancements are essential, the principles of tracking the likely source of funds remain the same after the fork. If the update is successful in eliminating these backdoors, there is a danger that OFAC might take similar action against Monero.
The developers prospective capacity to benefit from these smart contracts renders him accountable. The Dutch financial crimes agency FIOD detained a Tornado Cash developer suspected of using the application to launder money. It is unknown if he was arrested for his attempts to launder money or for his association with others who did so.
Though major privacy coins like Monero and Z-cash are actively trying to improve transaction privacy, they havent obtained the same level of acceptance as leading layer-1 blockchains such asEthereum. Many rivals, notably Secret Network and Oasis Network, believe that privacy coins do not provide a privacy layer that can be utilised to create Web3.
In 2020, Secret Network was the first privacy-based blockchain to offer the programmability of smart contracts. It resides in the Cosmos ecosystem and works towards a Web3 privacy goal. Multiple applications have been released, including the decentralised messaging service Altermail and the decentralised exchange SiennaSwap.
However, Secret Network and its rivals confront the typical difficulty of a crowded market. They have a long way to go before overcoming the market domination of Monero and Z-Cash. The prospect of punishment has spurred many members of the Z-Cash community to investigate the possibility of programming their smart contracts.
Amid the battle for financial privacy, the state has used two distinct instruments thus far. They employed the regulatory sanctions hammer with crypto mixers. If one financial privacy method is too popular with criminals or difficult to trace, their strategy may be to eliminate it.
Advocacy groups such as Coin Center may challenge such measures in court, but this may take years. In the meanwhile, the sanctions are probably harming innocent Americans.
They may continue their cat-and-mouse game with developer upgrades via investigations for other privacy solutions.
However, user adoption is a crucial aspect of this game. As more users use mixers or privacy coins, tracing transactions becomes progressively more difficult. It is comparable to the traditional police pursuit into a tiny alley. If the suspect approaches a busy procession, they can brush themselves off and blend with the crowd.
If a privacy coin, mixer, or base-layer privacy solution obtains widespread adoption, its resistance to censorship might increase. State officials would struggle to garner political support for sweeping punishments or the necessary technologies to circumvent privacy protections. And the possible repercussions of Tornado Cash punishments on Ethereum validators may draw millions more into this discussion.
See the original post here:
Can Crypto Mixers And Privacy Coins Withstand Censorship? - Coin Culture
- Australias populist right embraces unconstrained freedom of expression but only when it suits them - The Guardian - May 25th, 2024 [May 25th, 2024]
- Pro-Palestinian artists face ongoing censorship in the US, while rich art collectors demand student protesters be ... - WSWS - May 25th, 2024 [May 25th, 2024]
- Israels censorship of the AP is a cautionary tale for the US - The Hill - May 25th, 2024 [May 25th, 2024]
- New tool tracks incidents of artistic censorship related to Israel-Hamas war - Art Newspaper - May 25th, 2024 [May 25th, 2024]
- A New Index is Mapping Incidents of Censorship - ARTnews - May 25th, 2024 [May 25th, 2024]
- Israel's seizure of AP equipment shows slippery slope of censorship - Freedom of the Press Foundation - May 25th, 2024 [May 25th, 2024]
- SJP hosts graduation ceremony in response to UH's divestment censorship - The Cougar - The Daily Cougar - May 25th, 2024 [May 25th, 2024]
- Now city staff impose their own censorship over what council members can add to council agendas - The Citizen.com - May 25th, 2024 [May 25th, 2024]
- On never being able to stop - Index on Censorship - May 25th, 2024 [May 25th, 2024]
- Israel's seizure of AP equipment is censorship, plain and simple - Freedom of the Press Foundation - May 25th, 2024 [May 25th, 2024]
- Minnesota and other Democratic-led states lead pushback on censorship. They're banning the book ban - Sentinel ... - Sentinel Colorado - May 25th, 2024 [May 25th, 2024]
- Where are those who stand against censorship and cancel culture now? - Jos Soeiro - DiEM25 - May 25th, 2024 [May 25th, 2024]
- Have Pro-Palestine Artworks Been Censored in Your State? - Hyperallergic - May 25th, 2024 [May 25th, 2024]
- CAIR Urges Facebook Oversight Board to Reject Pressure to Censor Pro-Palestinian Speech - - Council on American-Islamic Relations - May 25th, 2024 [May 25th, 2024]
- Jon Stewart Mocks Conservative Freak Out Over Left Wing 'Censorship': 'Trump Is the Real Cancel Culture' | Video - TheWrap - May 25th, 2024 [May 25th, 2024]
- Musk, Moraes, and the battle for free speech - The Brazilian Report - May 25th, 2024 [May 25th, 2024]
- Washington Post urges universities to get rid of DEI statements: 'Self-censorship' - Fox News - May 25th, 2024 [May 25th, 2024]
- Book Censorship: Academic Freedom Comes at a Price, When Will American Schools be Willing to Pay? - The Inquirer - May 25th, 2024 [May 25th, 2024]
- NRA case shows the Supreme Court must stop informal censorship - Foundation for Individual Rights and Expression - March 24th, 2024 [March 24th, 2024]
- Microsoft faces bipartisan criticism for alleged censorship on Bing in China - The Register - March 24th, 2024 [March 24th, 2024]
- Is Fighting Misinformation Censorship? The Supreme Court Will Decide. - Reply All | Gimlet - March 24th, 2024 [March 24th, 2024]
- The censorship industry and it's connection to Israel - JNS.org - March 24th, 2024 [March 24th, 2024]
- How to improve Chinese TV? Better censorship, says top tellie-maker - The Register - March 24th, 2024 [March 24th, 2024]
- Up First briefing: Putin wins Russian election; SCOTUS censorship case - NPR - March 24th, 2024 [March 24th, 2024]
- Elon Musk calls X number one source of news in the worldand also a hardcore, player versus player platform - Fortune - March 24th, 2024 [March 24th, 2024]
- Asking is not censorship: No First Amendment bar for government to talk to publishers - New York Daily News - March 24th, 2024 [March 24th, 2024]
- X-Men: The Animated Series was defined by its censors - Polygon - March 24th, 2024 [March 24th, 2024]
- Justice Jackson lambasted for 'concern' 1st Amendment could 'hamstring government' in COVID censorship hearing - Fox News - March 24th, 2024 [March 24th, 2024]
- The Beginning of the End for the Censorship-Industrial Complex? - National Review - March 24th, 2024 [March 24th, 2024]
- RFK Jr.: Government shouldnt have role in social media moderation - NewsNation Now - March 24th, 2024 [March 24th, 2024]
- Self-Pollinating Narrator of 'Wishtree' Called 'Indoctrination,' Virginia District Group Read Canceled | Censorship News - News Letter Journal - March 24th, 2024 [March 24th, 2024]
- This Country Can't Afford A SCOTUS Weak On Internet Censorship - The Federalist - March 24th, 2024 [March 24th, 2024]
- Banning TikTok is just the first step to censorship - Point Park Globe - March 24th, 2024 [March 24th, 2024]
- SCOTUS Ponders Whether Biden Administration Coerced Social Media Platforms To Censor Speech - Reason - March 24th, 2024 [March 24th, 2024]
- In Virginia, Censors Attempt to Axe 'Wishtree' - Publishers Weekly - March 24th, 2024 [March 24th, 2024]
- Elon Musk Says Moderation Is a Propaganda Word for Censorship About Offensive X Posts - Rolling Stone - March 24th, 2024 [March 24th, 2024]
- Supreme Court Makes A Mockery Of Free Speech - The Federalist - March 24th, 2024 [March 24th, 2024]
- No matter how you view TikTok, banning the platform would be censorship - The Daily Orange - March 24th, 2024 [March 24th, 2024]
- China must look beyond censorship and economic power to win hearts and minds - South China Morning Post - February 5th, 2024 [February 5th, 2024]
- 'The View' Producers Forced To Censor Ana Navarro's Expletive As She Talks About Biden - Daily Caller - February 5th, 2024 [February 5th, 2024]
- How China Censors Critics of the Economy - The New York Times - February 5th, 2024 [February 5th, 2024]
- A Startup Allegedly 'Hacked the World.' Then Came the Censorshipand Now the Backlash - WIRED - February 5th, 2024 [February 5th, 2024]
- Negative Takes on China's Economy Are Disappearing From the Internet - The Wall Street Journal - February 5th, 2024 [February 5th, 2024]
- Let The Government Censor Away Through Agents It Controls, Say Cabal Of A.G.s To U.S. Supreme Court Wirepoints - Wirepoints - February 5th, 2024 [February 5th, 2024]
- 14 Massachusetts colleges land on restrictive free speech list: Censorship and terrible policies - Boston Herald - February 5th, 2024 [February 5th, 2024]
- The Association of Appin Training Centers is waging a global censorship campaign to stop you from reading these ... - MuckRock - February 5th, 2024 [February 5th, 2024]
- Norway owns a part of Putin's propaganda and censorship machine - The Independent Barents Observer - February 5th, 2024 [February 5th, 2024]
- Censorship? That's just obscene! | Opinion | register-herald.com - Beckley Register-Herald - February 5th, 2024 [February 5th, 2024]
- Censorship in the West is the same as Mao's China, says Chinese dissident artist Ai Weiwei - Sky News - February 5th, 2024 [February 5th, 2024]
- South Korean government reported to announce plans for smoking scene censorship from K-dramas and films at the ... - Sportskeeda - February 5th, 2024 [February 5th, 2024]
- Prime Video's 'Expats' Was Filmed in Hong Kongbut You Can't Watch It There - TIME - February 5th, 2024 [February 5th, 2024]
- ADF to 8th Circuit: Govt can't censor pro-life views - ADF Media - February 5th, 2024 [February 5th, 2024]
- Fox News Forced To Censor Trump As He Rants About Gavin Newsom And Michelle Obama - Towleroad - February 5th, 2024 [February 5th, 2024]
- NYC teachers will exchange notes on how to get around censorship to teach kids about the genocide in Gaza - New York Post - February 5th, 2024 [February 5th, 2024]
- The GOP Has a Plan for Online Safety. It Involves Censoring LGBTQ Content. - The New Republic - February 5th, 2024 [February 5th, 2024]
- Opinion: Need help finding a good book? Try one your 9th grader isn't allowed to read - Los Angeles Times - February 5th, 2024 [February 5th, 2024]
- 'Gateway to Censorship': Journalist Bodies Express Concern Over Proposed Broadcasting Services Bill - The Wire - February 5th, 2024 [February 5th, 2024]
- The Dangerous Pursuit of Journalism in Russia: A Harrowing Reality - Medriva - February 5th, 2024 [February 5th, 2024]
- Global censorship campaign raises alarms - Freedom of the Press Foundation - January 21st, 2024 [January 21st, 2024]
- Texas Library Censorship Attempt Struck Down By 5th Circuit - Above the Law - January 21st, 2024 [January 21st, 2024]
- Attacks, arrests, threats, censorship: The high risks of reporting the Israel-Gaza war - Committee to Protect Journalists - January 21st, 2024 [January 21st, 2024]
- South Sudan's Battle with Censorship: Removing Hateful News Articles - The Organization for World Peace - January 21st, 2024 [January 21st, 2024]
- Intimidation leading to censorship in Wisconsin school libraries - Milwaukee Journal Sentinel - January 21st, 2024 [January 21st, 2024]
- Censorship over Palestine: Holocaust Survivor Decries Repression After Talks in Germany Are Canceled - Democracy Now! - January 21st, 2024 [January 21st, 2024]
- As Legacy Media Continues in Decline, It Espouses Censorship More - Walter Bradley Center for Natural and Artificial Intelligence - January 21st, 2024 [January 21st, 2024]
- Trump Nomination: Pundit Expects Censorship, Calls for Riots - The Dallas Express - January 21st, 2024 [January 21st, 2024]
- Data Overwhelmingly Supports Libraries and Library Workers: Book Censorship News, January 5, 2024 - Book Riot - January 5th, 2024 [January 5th, 2024]
- Blame adults these days for censorship - Times Higher Education - January 5th, 2024 [January 5th, 2024]
- CNN admits it runs all Gaza coverage through bureau monitored by Israeli military censor - Salon - January 5th, 2024 [January 5th, 2024]
- Does your Pa. school policy open the door to censorship? - phillyBurbs.com - January 5th, 2024 [January 5th, 2024]
- Iran's internet price rises, and so does the fear of greater censorship - TechRadar - January 5th, 2024 [January 5th, 2024]
- Report highlights censorship and repression of Palestine solidarity across Europe - Morning Star Online - January 5th, 2024 [January 5th, 2024]
- 2024, the year that four billion go the polls - Index on Censorship - January 5th, 2024 [January 5th, 2024]
- Government Internet censorship was imposed 196 times last year - 9to5Mac - January 5th, 2024 [January 5th, 2024]
- In the shadows of self-censorship: The impact of the Cyber Security Act on Bangladeshs LGBTQ+ movement - Global Voices - January 5th, 2024 [January 5th, 2024]
- Jeffrey Wright Says Studio Hired a Replacement Actor to Dub Him After He Refused to Censor the N-Word in a Film: Nah. Thats Not Happening - Variety - January 5th, 2024 [January 5th, 2024]
- Comedian and musician Tom Smothers dies at 86: A victim of government and corporate censorship in the late 1960s - WSWS - January 5th, 2024 [January 5th, 2024]
- Polish pavilion selection at Venice Biennale gets political as rejected artist cries censorship - Art Newspaper - January 5th, 2024 [January 5th, 2024]
- Wartime censorship is necessary, but must be responsible - editorial - The Jerusalem Post - January 5th, 2024 [January 5th, 2024]
- Jeffrey Wright Says a Replacement Actor Dubbed His Lines When He Refused to Censor the N-Word - PEOPLE - January 5th, 2024 [January 5th, 2024]