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Tornado Cash co-founder reports being kicked off GitHub as industry reacts to sanctions

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Tornado Cash co-founder reports being kicked off GitHub as industry reacts to sanctions

OFAC issued a statement implying prohibited transactions with Specially Designated Nationals could include “downloading a software patch from a sanctioned entity.”

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Tornado Cash co-founder reports being kicked off GitHub as industry reacts to sanctions

Roman Semenov, one of the co-founders of Tornado Cash, has reported his account was suspended at the developer platform, GitHub, following the United States Treasury Department’s sanctioning of the privacy protocol.

In a Monday tweet, Semenov said that despite not being individually named as a Specially Designated National, or SDN, of Treasury’s Office of Foreign Asset Control, he seemed to be facing repercussions from the Treasury alleging Tornado Cash had laundered more than $7 billion worth of cryptocurrency. As SDNs, identified firms and individuals have their assets blocked and “U.S. persons are generally prohibited from dealing with them.”

My @GitHub account was just suspended

Is writing an open source code illegal now?

— Roman Semenov ️ (@semenov_roman_) August 8, 2022

Being identified as an SDN would seemingly include any contact for business purposes, which could extend to associations on GitHub. According to a joint statement from the Federal Financial Institutions Examination Council and Office of Foreign Asset Control, prohibited transactions could be interpreted to include “downloading a software patch from a sanctioned entity.”

Semenov called the move to suspend his account “a bit illogical.” However, U.S. residents have been effectively barred from using the crypto mixer, given its alleged failure “to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks,” according to Brian Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence.

Some pro-crypto advocates have posited that the Treasury’s actions against Tornado Cash were the sanctioning of a “neutral tool” rather than the targeting of individuals responsible for using it for illicit means. Jake Chervinsky, head of policy at the Blockchain Association, claimed the U.S. Treasury Department’s decision may have “crosse[d] a line” between penalizing bad actors and those who dethe tools and technology they might use.

“It is not any specific bad actor who is being sanctioned, but instead it is all Americans who may wish to use this automated tool in order to protect their own privacy while transacting online who are having their liberty curtailed without the benefit of any due process,” said Jerry Brito, executive director of Coin Center.

Today’s action does not seem so much as a sanction against a person or entity with agency. It appears instead to be the sanctioning of a tool that is neutral in character and that can be put to good or bad uses like any other technology. https://t.co/Gr8skWKiaR

— Jerry Brito (@jerrybrito) August 8, 2022

A crypto mixer, Tornado Cash can be used to hide the trail of transactions for privacy reasons. The protocol was at the center of some major hacks and exploits in decentralized finance, including a $375-million attack on Wormhole in February and a $100-million hack on Horizon Bridge in June. The company announced in April that it was using oracle contracts from Chainalysis to block wallet addresses sanctioned by the Office of Foreign Assets Control following the Treasury Department alleging the North Korean hacking group Lazarus was behind a $600-million exploit of Ronin Bridge.

Cointelegraph reached out to Tornado Cash, but did not receive a response at the time of publication.

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Grayscale Launches New Investment Product While Bitcoin Trust Crashes to 35%

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Grayscale Launches New Investment Product While Bitcoin Trust Crashes to 35%

Grayscale Investments is offering investors an opportunity to invest in Bitcoin mining hardware in the bear market.

The new investment opportunity, called the Grayscale Digital Infrastructure Opportunities LLC (GDIO), is now open to qualified individual and institutional investors, even as the asset manager allows ETF-related court proceedings to run their course.

Grayscale putting capital to work

Grayscale will use investor capital from the GDIO to buy mining hardware for a minimum of three years. It will use the hardware to mine and subsequently sell bitcoin. Mining is the energy-intensive process undertaken by a computer network to create a new transaction block and verify it. The node in the network that creates the block is known as a miner. A miner is rewarded in bitcoin for his effort, which typically requires large amounts of cheap electricity and computing power.

Part of the proceeds Grayscale will earn from its efforts will be paid out quarterly to GDIO investors.

“Grayscale’s unique position at the center of the crypto ecosystem enables us to create offerings that allow investors to put capital to work through differing market cycles,” stated Michael Sonnenshein, Grayscale’s chief executive.

GDIO represents another way the company has sought to provide investors with exposure to bitcoin without directly holding the asset.

Investors can also purchase shares from its GBTC trust and gain exposure to bitcoin through Grayscale’s legally regulated business in the U.S.

But Grayscale has a problem. Because investors cannot redeem shares in the trust for bitcoin, the price per share has dropped drastically, trading at a discount of 35% to its Net Asset Value. 

At the close of the trading day on Oct. 5, shares were trading at a shade over $12, despite being backed by $18.45 worth of bitcoin.

To mitigate this discount, Grayscale has pursued the conversion of GBTC into a spot bitcoin exchange-traded fund, which has so far been unsuccessful. The U.S. Securities and Exchange Commission denied the company’s latest application in June 2022, prompting Grayscale to pursue legal action against the federal agency. 

Nic Carter of Castle Island Ventures, a venture capital firm focused on early-stage public blockchain startups, said that Grayscale could wind down the ETF:

watching the GBTC discount. looks like ATL at -35%. on top of discounted spot BTC. paths to breaking open the piggy bank: SEC can approve ETF conversion, or Grayscale can wind down the trust themselves if they so choose.

— nic carter (@nic__carter) June 17, 2022

The SEC maintains that spot bitcoin ETFs are prone to underlying market manipulation.

Grayscale undeterred by SEC rejection

Despite consistent resistance from U.S. regulators, Grayscale launched its first European ETF in May 2022, which tracks the Bloomberg Grayscale Future of Finance Index, offering customers exposure to institutions at the crossroads of finance, technology, and cryptocurrencies.

Grayscale raised investors’ eyebrows recently when it announced that it had applied with the SEC to distribute 3 million ETHPoW tokens that were distributed to all Ethereum (ETH) holders after the controversial proof-of-work fork went live. 

At the time, Grayscale said it was seeking the rights to sell the tokens and pay out shareholders. 

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Colorado is accepting crypto for tax payments — it could be a mess or a shining example

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Colorado is accepting crypto for tax payments —  it could be a mess or a shining example

Colorado is now accepting crypto for tax payments — but if you choose to use that option, it could change the amount you owe…
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BNB Chain confirms BSC halt due to ‘potential exploit’

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BNB Chain confirms BSC halt due to ‘potential exploit’

Rumors of a significant hack on the BNB Chain were confirmed by the blockchain’s team, with all deposits and withdrawals suspended on the network…
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