CEO and Founder of Shapeshift Eric Voorhees After the US Treasury Department authorized Tornado Cash, it recommended that the MakerDAO community take precautionary measures.
Specifically, Voorhees advised MakerDAO users to remove their USDC collateral and convert their funds to another stablecoin. However, he did not go so far as to endorse a more censorship-resistant option.
We have time, but we need to start.
— Eric Voorhees (@ErikVoorhees) August 8, 2022
August 8th, U.S. Treasury Department has issued a press release stating that cryptocurrency mixer Tornado Cash has been sanctioned for its involvement in laundering illegal cryptocurrency funds worth more than $7 billion since 2019. Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence, said:
“Despite public guarantees to the contrary, Tornado Cash routinely launders money for malicious cyber attackers without basic measures to deal with the risks. We have repeatedly failed to impose effective controls designed to stop it.”
The incident sparked debate about government overreach and alternatives to centralized stablecoins.
The end of the tornado cache
Tornado Cash’s website is offline, its developer has been kicked out of GitHub, and Circle has been sanctioned and blacklisted USDC addresses owned by the organization.
A few months ago, Circle CEO Jeremy Allaire dismissed claims that the company could freeze USDC accounts as FUD for any reason. He also countered by implying that groups operating within the law have nothing to fear.
coin center The sanctions against tools, rather than individuals or entities with agency, which issued a statement on the matter, are a blow to those wishing to maintain their privacy and “otherwise purely for legal and personal reasons.” including”.
“Instead, it appears to license tools that are neutral in nature and can be used for good or bad like any other technology.”
This point is widely supported by members of the cryptocurrency community who view sanctions as an attack on individual sovereignty.
big brother is watching
Founder of Bankless, Ryan Adamsspoke out by calling the U.S. Treasury Department’s actions “the first shot in my brother’s attack on crypto.”
In a subsequent tweet, Adams where does this end? It suggests that Uniswap could be next, and Ethereum could be next — further hinting at a toe into totalitarianism.
“If your software isn’t secure, your speech isn’t secure either.”
Following USDC censorship, researchers at the NEAR Protocol DeFi platform Proximity @Resdegenproposed to develop a new decentralized stablecoin free from government directives.
Resdegen considers Reflexer’s Rai and Liquidity’s LUSD to be 100% decentralized, but both are collateralized, which is a disadvantage in terms of scalability. Resdegen suggested developing a new project that would be algorithmically pegged using BTC or ETH derivative contracts.
I highly recommend reading about them (Vitalik is a big proponent of RAI)
However, being a collateralized stablecoin means that its scalability depends on the market cap of ETH.
— Res®️ (@resdegen) August 8, 2022