On Monday, USDC stablecoin (USDC) issuer Circle froze funds worth 75,000 USDC linked to 44 Tornado Cash addresses approved by the US Office of Foreign Assets Control (OFAC), according to crypto data aggregator Dune Analytics. Specially Designated Citizens and Blocked Persons (SDN) List. Tornado Cash is a decentralized application, or dApp, used to obfuscate traces of past cryptocurrency transactions on the Ethereum blockchain.
All US individuals and entities are prohibited from interacting with the USDC and Ethereum smart contract addresses of virtual currency mixers on the SDN list. Fines for willful non-compliance can range from $50,000 to $10,000,000 and imprisonment of 10 to 30 years. One Estimated $437 million worth of assets, including stablecoins, ethereum, and wrapped bitcoin (wBTC), are currently held in Tornado Cash’s smart contract addresses. As a result, issuers are expected to take steps to prevent the transaction or redemption of such assets.
Both the entities behind USDC and Tether can freeze their stablecoin transfers to and from Tornado Cash at the Ethereum smart contract level. Meanwhile, Palo Alto, Calif., which is based at BitGo, would in theory need to restrict access to Tornado Cash to comply with such restrictions. One possible approach is to suspend the redemption of Tornado-Cash linked wBTC.
as Told By DeFi educator @BowTiedIguana, the new Tornado cash restrictions go across the board for US individuals and entities. Simple interactions such as donating Gitcoin, working for a project, running or downloading its software, visiting its website, and making deposits/withdrawals from smart contracts can be interpreted as infringing.
Circle just froze 75,000 USDC that belonged to unsuspecting Tornado users, plus 149 USDC donated to the project. pic.twitter.com/GBS41FtZvB
— bantag (@bantg) 8 August 2022
