OFAC Sanctions Tornado Cash
Code: NT-117
Tags: #privacy #compliance #ethereum
Language: en
Situation Report
OFAC added Tornado Cash smart contracts to the SDN list, an unprecedented move that named autonomous code alongside individuals. Frontends geofenced U.S. users within hours.
Architecture Notes
Because sanctions targeted contract addresses, the community debated whether relays and validators needed to censor transactions touching those UTXOs. Compliance firms rolled out screening APIs for Ethereum addresses.
Operational Impact
GitHub pulled the Tornado repo temporarily, and one contributor was arrested in the Netherlands, chilling open-source collaboration. Dapp teams rushed to publish policies clarifying how they would handle mixed funds.
Forward Watch
Key questions: could challenges in court redefine how sanctions apply to code, and would relay-level censorship become the norm on proof-of-stake Ethereum?