Technology

How will the Tornado Cash sanction affect DeFi?

On August 8, US Secretary of State Antony Blinken said that the country will endorse Tornado Cash, a decentralized application on the Ethereum blockchain, that allows the anonymous transfer of bitcoin. Due to the reasoning behind it as well as how it was executed, this has angered the crypto community and may be a precursor of a serious government crackdown on the industry. Tornado Cash, launched in 2019, is one of the first fully decentralized apps on Ethereum to offer private transactions. It accomplished this by first accepting user payments, combining them into a single address, and allowing users to withdraw funds to a second Ethereum address. Due to the mixture of Ethereum addresses, it was impossible to determine who the original owner was. Tornado Cash offered a way for people who valued their privacy to invest in and utilize cryptocurrencies without having their transactions automatically made public on Ethereum, which makes every transaction public by default. With Tornado Cash’s assistance, more than $7 billion in user funds have already been mixed.

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