Alchemy and Infura block access to Tornado Cash as Vitalik Buterin weighs in on debate

U.S. persons and entities must comply with the Treasury’s sanctions or face possible criminal consequences.

According to Twitter user @0xdev0, on Monday, Web 3.0 development platform Alchemy and Infura.io blocked remote procedure call (RPC) requests to cryptocurrency mixer Tornado Cash, preventing users from accessing the applications. The day prior, the U.S. Treasury placed 44 smart contract addresses linked to Tornado Cash in the Specially Designated Nationals and Blocked Persons (SDN) list. U.S. persons and entities are prohibited with blockchain or business interactions with Tornado Cash under such sanctions, with the possibility of criminal liabilities for violations.

The move came after the U.S. Treasury alleged individuals and groups had used the privacy protocol to launder more than $7 billion worth of crypto since 2019, including the $455 million stolen by the North Korea-affiliated Lazarus Group. Almost immediately after the announcement, stablecoin issuer Circle froze USD Coin funds held within Tornado Cash’s smart contracts. Meanwhile, programming repository GitHub took down the project’s main page and blocked developer access.

Vitalik Buterin, the co-founder of Ethereum, claimed that he used Tornado Cash to donate to Ukraine. The intent, as told by Buterin, was to protect the financial privacy of the recipients so that their enemy, the Russian government, would not have full details of the transaction.

I’ll out myself as someone who has used TC to donate to this exact cause.

— vitalik.eth (@VitalikButerin) August 9, 2022

Others have also pointed out the mixer’s privacy applications, such as for an individual getting paid in crypto and don’t want an employer to see their financial details, or paying for a service in crypto and not wanting the service provider to see past transactions from one’s wallet. On the other hand, the tool has, in part, acted as a hotspot for enabling anonymous hackers to launder stolen funds from protocol exploits particularly cross-chain bridges. More than $2 billion worth of funds have been stolen from such applications year to date.