Arbitrum DAO Votes to Fund Legal Defense for Tornado Cash Developers

The Arbitrum DAO will vote to allocate up to ​​600,000 ARB for the legal defense expenses of Tornado Cash's developers.

Arbitrum DAO votes on $1M fund for Tornado Cash developers’ legal defense.

The Arbitrum DAO is making waves in the crypto community as it considers funding the legal defense costs for the developers of Tornado Cash, the popular crypto mixer. This bold move aims to protect both privacy-preserving technologies and the principles of innovation, decentralization, and individual sovereignty within the industry. If approved, the community would donate up to 600,000 ARB tokens, valued at nearly $1.3 million at the time of writing ^[1].

The Proposal and Funding Levels

The proposal, submitted by a pseudonymous delegate known as DK on March 7, focuses on providing a robust legal defense for Roman Storm and Alexey Pertsev, the developers behind Tornado Cash. It also aims to support public relations and advocacy efforts to raise awareness about privacy-preserving technologies and the legal burdens faced by developers ^[1].

The voting for the proposal is divided into three tiers based on different funding levels. The options range from 200,000 to 600,000 ARB tokens. As of now, more than 80% of the votes have been cast in favor of the highest tier. The deadline for voting is set for March 14 ^[1].

The Accusations and the Controversy

Tornado Cash and its founders have faced significant legal actions due to allegations that the platform played a role in laundering over $1 billion in illicit funds. This included money linked to the notorious North Korean hacking organization, Lazarus Group. The platform was even added to the United States sanctions lists, effectively banning residents of the country from using the service ^[1].

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However, supporters of Tornado Cash argue that the platform merely provides software for decentralized money transmission and is not directly involved in money transmission itself. This raises questions about the validity of the charges against the developers. According to the crypto advocacy group Coin Center, FinCEN guidelines state that anonymizing software providers should not be considered money transmitters ^[1].

The Serious Charges

Roman Storm and Alexey Pertsev are facing several charges from U.S. authorities, including conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money-transmitting business. Each of the first two charges carries a maximum sentence of 20 years in prison, while operating an unlicensed money-transmitting business is punishable by up to five years in prison ^[1].

The seriousness of these legal challenges not only threatens the developers’ ability to continue their work but also undermines the fundamental principles of decentralization and individual freedom upon which projects with privacy-preserving technologies are built ^[1].

Looking Beyond GoFundMe’s Cancellation

This community proposal comes shortly after the cancellation of a GoFundMe campaign dedicated to collecting legal fees for Storm and Pertsev. GoFundMe cited a breach of its terms of service as the reason, stating the potential harm or liability it could cause to their platform, employees, or users ^[1].

The situation surrounding Tornado Cash and its developers is a pivotal moment for the cryptocurrency community. It raises important questions about the treatment of privacy-preserving technologies and the role of developers in the face of legal challenges. The outcome of this vote will not only shape the future of Tornado Cash but also set a precedent for the entire industry.

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Q&A: What Readers Need to Know

Q: What is Tornado Cash?

A: Tornado Cash is a crypto mixer or tumbler that allows users to mix their cryptocurrency transactions for enhanced privacy and fungibility. It helps break the link between the sender and receiver, adding an extra layer of anonymity to blockchain transactions. However, it has recently faced legal actions and accusations relating to money laundering ^[1].

Q: What is the significance of the Arbitrum DAO’s vote?

A: The Arbitrum DAO’s vote to fund the legal defense of Tornado Cash’s developers signifies a collective effort to protect privacy-preserving technologies and the principles of innovation, decentralization, and individual sovereignty within the industry. The outcome of this vote could influence the future development and acceptance of similar technologies ^[1].

Q: Can Tornado Cash be held responsible for illicit funds transferred through its platform?

A: Supporters of Tornado Cash argue that the platform merely provides software for decentralized money transmission and should not be directly held responsible for transactions conducted by its users. They believe that targeting the developers sets a dangerous precedent that could stifle innovation and privacy-enhancing technologies ^[1].

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In conclusion, the future of Tornado Cash and its developers hangs in the balance as the Arbitrum DAO votes on funding their legal defense. This decision will not only determine their fate but also shape the industry’s stance on privacy-preserving technologies. Regardless of the outcome, it highlights the importance of protecting innovation, decentralization, and individual freedom in the world of blockchain and cryptocurrencies.

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References:

1. Arbitrum DAO Supports Tornado Cash Legal Defense Fund Proposal. Link here.

2. Tornado Cash 2.0 — The race to build safe and legal coin mixers. Link here.

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