Tornado Cash: Ethereum's Privacy Pioneer Faces US Sanctions
Tornado Cash, a decentralized protocol enhancing privacy on the Ethereum blockchain, has gained attention and controversy. It uses advanced cryptography to anonymize transactions, but its use by hackers and money launderers led to US sanctions in 2022.
Tornado Cash, created by an unknown developer or team, operates as a privacy-focused Ethereum mixer service. It employs zk-snarks, a type of zero-knowledge proof, to conceal the link between sender and recipient addresses. Here's how it works: funds are first sent to a Mixer smart contract, then forwarded to a new address, making transaction tracing challenging.
The protocol is managed decentralizedly through a DAO, using the token 'torn'. It stands out for providing anonymity without relying on trusted intermediaries. However, its use by illicit actors resulted in a 2022 sanction by the US Department of the Treasury (OFAC).
Tornado Cash, despite its innovative privacy features, faces regulatory challenges due to its past associations. Its decentralized management and anonymity-focused design continue to spark debate in the crypto community.
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