Although this week was fruitful for several major crypto events, there was an undisputed champion, eclipsing everything that had happened recently. On Monday, the Treasury Department sanctioned the crypto mixer Tornado Cash along with other crypto wallet addresses associated with the service. What this meant for the protocol and addresses associated with it is that from now they are blacklisted, making them illegal for American users.
The significance of this event should not be underestimated, as this is the first time the US government effectively banned software which is arguably neutral by its default settings.
What started as a matter of national security quickly drew a lot of attention from the crypto community, with many industry specialists condemning the government’s actions. Subsequently, the crypto industry, with DeFi in particular, faced an existential crisis: either remain non-complaint and true to the ideology many crypto aficionados adhere to or sell their soul to the devil and bend the knee. Today’s editorial will discuss what the industry should expect in the upcoming months.
What Is Tornado and Why It Was Banned
Tornado essentially represents a privacy tool that enables users to obfuscate where their funds have been and where they’re going. In other words, it turns the transparency of blockchain technology into a black box, concealing users’ crypto activity. The Treasury got so upset with the Tornado software because the Lazarus Group, a hacker group from North Korea, had been using the service to launder stolen Crypto. According to Crypto sleuthing company Elliptic, in total, the Treasury said that the service “has been used to launder more than $7 billion worth of virtual currency since its creation in 2019.”
Two Sides Of The Coin: The Outburst From The Community
Many community members argued that the imposed sanctions are not directed against any terrorist organization in particular but rather are an excuse for the government to ban a tool that allows users to protect their privacy while transacting online. Interestingly, even Ethereum’s co-founder Vitalik Buterin admitted that he had used the software (before it was blacklisted) to donate to Ukraine.
However, the biggest threat to the crypto community comes from the sanctions’ ripple effects, with DeFi taking the major hit. Unfortunately, not everyone is ready to go against the established narrative, with some major crypto projects complying with the Treasury demands on the spot. For example, the DeFi exchange dYdX banned addresses associated with Tornado cash almost immediately. What makes this situation even worse is that dYdX acknowledged that most of these accounts had never been directly engaged with the services but were still banned nonetheless.
What About Broader DeFi Projects Like Revolutux?
To answer this question, we must first understand what services Revoloutux (RVLT) provides its users. In its essence, it’s a blockchain platform that unites under a single umbrella DeFi, NFTs and DAO (decentralized autonomous organization). The DAO built around the community would help the project to develop a novel economic infrastructure comprising various tools where users could engage in several crypto activities.
According to CryptoMode, one feature that makes the project stand out is the Revolutux swap, which would allow users to search for the lowest transaction rates across different decentralized exchanges through the Revolutux platform. Such a practice would effectively combine the benefits of a decentralized and on-chain transaction settlement to make the user experience smooth and without extra hassle.
So, What Awaits Crypto?
Despite the desire of the government to ban crypto, no one can block these transactions unless the platform you are using does that. And even then, unless you store your assets on a platform’s wallet, there is little the government can do to prevent you from transferring your assets.
Considering this, platforms like Revolutux that want to promote users’ right to decentralization and privacy need to choose whether to bend the knee or go rogue. The upcoming month would determine which path the DeFi industry would follow.
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