Tornado Cash Ban Might Mean Disaster For Other Privacy Protocols

Tornado Cash ban might mean disaster for other privacy protocols, according to Manta co-founder, Shumo Chu.

There are growing worries that the recent sanctions imposed by the US government on Tornado Cash could create a “slippery slope” for Web3 privacy and ultimately render the medium “meaningless.”

The co-founder of the privacy protocol Manta Network, Shumo Chu, voiced concern that the severe penalties imposed on Tornado Cash would have a negative ripple impact on other Web3 protocols, including those that provide privacy.

Chu is a co-founder of the layer-1 privacy protocol Manta Network. Manta Network is built on Polkadot and allows for private transactions in decentralized finance (DeFi).

A privacy system for Ethereum (ETH) called Tornado Cash (TORN) makes currency transfers anonymous. These protocols are comparable to Zcash (ZEC) and Monero (XMR), which hide the sender and recipient details of cryptographic transactions.

The U.S. Treasury Department essentially forbade US citizens from using the protocol earlier this month and added 44 ETH and USD Coin (USDC) addresses linked to it on August 5 to the list of Specially Designated Nationals.

My opinion piece on @TornadoCash and the future of on chain privacy:https://t.co/4Oe0KxRg1l
(Appreciate for @kobigurk's feedback) #TornadoCash

— shumo.manta 🛡️ 🧬 🚀 (@shumochu) August 15, 2022

Tornado Cash Ban Might Mean Disaster For Other Privacy Protocols

Chu expressed concern that other privacy protocols similar to his may find themselves targeted in the same way, increasing censorship to the point where it basically renders the entire Web3 realm worthless.

Chu noted that the U.S. government’s decision to impose the ban was apparently made in the sake of national security because Lazarus, a North Korean hacking gang, has a history of using Tornado to launder the money it has stolen.

Chu, though, raised doubts about authorities’ comprehension of how decentralized systems built on open-source code might be found and used anywhere by outlawing the protocol.
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“It’s quite possible regulators just don’t understand distributed blockchain technology and how open source code can be anywhere. [They] may have actually thought Tornado Cash developers deliberately helped North Korean hackers.”

A Tornado Cash developer was detained by Dutch authorities last week on suspicion of participating in money laundering.

The Ethereum engineer Virgil Griffiths was one of the cryptography developers who was detained in the past, according to Chu, but banning a protocol is “a new paradigm” that suggests the government is trying to control the math and coding in general.

Chu thinks that privacy protocol creators eventually have the advantage though. Since privacy developers are dispersed throughout several nations beyond the purview of the US government, he said, noting:

“If the US tries to implement draconian measures over privacy devs, it won’t go very well for them.”

Chu, a privacy protocol creator, observes that there is a myth being perpetuated that privacy is solely for criminals, contending that regular people utilize it too.