Tornado Cash Privacy Tool To Use Chainalysis To Block Sanctioned Wallets

Tornado Cash privacy tool will use chainalysis to block sanctioned wallets as we can see more today in our latest cryptocurrency news today.

Tornado Cash noted:

“Maintaining financial privacy is essential to preserving our freedom, however, it should not come at the cost of non-compliance.”

Tornado Cash uses @chainalysis oracle contract to block OFAC sanctioned addresses from accessing the dapp.
Maintaining financial privacy is essential to preserving our freedom, however, it should not come at the cost of non-compliance.https://t.co/tzZe7bVjZt

— 🌪️ Tornado.cash 🌪️ (@TornadoCash) April 15, 2022

Tornado Cash privacy tool worked by breaking the on-chain link between the source and destination addresses and the deposits that go into a smart contract where they are mixed around with the deposits and they can be withdrawn by the new addresses and it is more private. The announcement came today, the policy could not be new and the reports show that before the Russian invasion of Ukraine sent sanctions into high gear and Tornado Cash was complying with the Office of the Foreign Assets Controls has a blacklist of crypto wallets from the suspected terrorist, criminals and individuals that are connected to the authoritarian governments.

To understand how the process works, imagine a club that you are willing to get into and in order to comply with the government rules to ban anyone underage from accessing the clubs and will put a bouncer at the door and looks for IDs and block under 21 from entering and what it doesn’t do is change anything about the club but the club is immutable. The Chainalysis oracle in this case is the bouncer and it is a smart contract that works on ETH and several other networks like Avalanche, BNB Smart Chain, and layer-two networks like Optimism and Polygon.

It is a piece of code that scans a crypto address and determines if it is a subject of sanctions from the US or other governments and the wallet is blocked from entering. The Chanalysis API pulls straight from the government notices and saves Tornado Cash and other dapps and the hassle of trying to maintain the complaince on their own.
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As long as the ETH Address is on the OFAC sanction list, any protocol using this service will not process their transactions.

Bloomberg quoted the company as saying that enforcing sanctions against it and other protocols was impossible and the site quoted the co-founder Roman Semenov saying that the developers didn’t have more access to the protocol than other users.