Highly recommend that everyone read, “Treasury’s War” to familiarize themselves as to both the methods and scope of power that OFAC wields on behalf of the Treasury Department.
Every wire, sender, recipient, and memo crosses their desk. If something is deemed as “suspicious” funds are frozen until they are satisfied. OFAC can send a litany of demands over before funds will be released
We once had a payoff wire seized for 48 hours because the borrower had a common Hispanic name and another person by the same name was on a red flag list.
The Treasury Department has spent years weaponizing OFAC. Ask anyone in banking
I cannot stress this enough. Do Not F Around.
It’ll be very “interesting” to see continued tightening around sacrifice projects like <redacted> where main contributors have historically been a big fan of Tornado Cash
Obviously the entire point of decentralized crypto is to remove a central authority's ability to block/suspend/prohibit transactions. As a result some small percentage of crypto will always be used for illicit purposes (just like a small percentage of cash is used for illicit purposes)
What is to stop OFAC from adding BTC or ETH or any other coin to the sanction list based on the same logic in the Treasury's press release, namely that these coins "failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks"?
Thanks for the update! The logic for blocking makes sense but there seems to be a lot of potential collateral damage for people in the crypto market who are unaware of the risk.
This may be too technical - but if US-based miners/validators restrict or ignore certain addresses, would that lead to different blocks of data for US and non-US entities (is that even possible)? Or would the underlying transaction data be the same and the US-entities would not recognize part of the block.
Separately, in a proof of stake system, if the majority of a chain's activity is non-US based and held by non-US persons that don't abide by the sanctions, could that impact an entire project for US participants?
Highly recommend that everyone read, “Treasury’s War” to familiarize themselves as to both the methods and scope of power that OFAC wields on behalf of the Treasury Department.
Every wire, sender, recipient, and memo crosses their desk. If something is deemed as “suspicious” funds are frozen until they are satisfied. OFAC can send a litany of demands over before funds will be released
We once had a payoff wire seized for 48 hours because the borrower had a common Hispanic name and another person by the same name was on a red flag list.
The Treasury Department has spent years weaponizing OFAC. Ask anyone in banking
I cannot stress this enough. Do Not F Around.
It’ll be very “interesting” to see continued tightening around sacrifice projects like <redacted> where main contributors have historically been a big fan of Tornado Cash
Press release from Treasury https://home.treasury.gov/news/press-releases/jy0916
Obviously the entire point of decentralized crypto is to remove a central authority's ability to block/suspend/prohibit transactions. As a result some small percentage of crypto will always be used for illicit purposes (just like a small percentage of cash is used for illicit purposes)
What is to stop OFAC from adding BTC or ETH or any other coin to the sanction list based on the same logic in the Treasury's press release, namely that these coins "failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks"?
Wow! Massive update - thanks for sharing this!
is there a way for eth miners to auto reject those transactions on the list? would ethereum devs want to add that ability?
Thanks for the update! The logic for blocking makes sense but there seems to be a lot of potential collateral damage for people in the crypto market who are unaware of the risk.
This may be too technical - but if US-based miners/validators restrict or ignore certain addresses, would that lead to different blocks of data for US and non-US entities (is that even possible)? Or would the underlying transaction data be the same and the US-entities would not recognize part of the block.
Separately, in a proof of stake system, if the majority of a chain's activity is non-US based and held by non-US persons that don't abide by the sanctions, could that impact an entire project for US participants?
Protocols blocking sanctioned addresses from front ends wouldn't even do anything to prevent legal risk no?