Tornado Cash Passes First Governance Proposal Since Sanctions

Tornado Cash, a privacy protocol which allows users to obscure the flow of crypto assets, has passed its first governance proposal since the U.S. Treasury Department levied sanctions on it in August. 

The proposal makes tornadocash.eth, the protocol’s Ethereum Name Service (ENS) domain, point to a new community-built interface for Tornado Cash. 

The previous interface was dependent on a hosted version of The Graph, a data protocol, which dropped support for Tornado Cash in the wake of the sanctions, Micah Zoltu, an engineer, told The Defiant.

The proposal, which passed unanimously on Dec. 13, also addressed other “weak points” in the interface, the engineer said. 

One user that voted with almost 20,000 TORN tokens, left a note regarding Alexey Pertsev, the programmer who contributed to Tornado Cash and is currently imprisoned in the Netherlands.

“[The vote] means that Tornado really is a community project and not just a faux community project like many,” Zoltu said. “It signifies that there are still people out there who really do care about making the world a better place and aren’t just in it for the money.”

Indeed, OFAC’s sanctions, coupled with Pertsev’s arrest days later, have galvanized the crypto industry like few other events. Coinbase has funded a lawsuit to get the sanctions lifted. Coin Center, a non-profit advocacy group for crypto, has also sued the U.S. Treasury Department. 

In light of the ambiguous legal status of Tornado Cash, it’s noteworthy that at least some people were willing to vote on the proposal. “As a TORN holder, you are certainly exposing yourself to complex legal risks by participating,”  Martin Köppelmann, the co-founder of Gnosis, an Ethereum sidechain, tweeted. 

Community Control

The ability of Tornado’s community to modify the project goes to show that the project can operate independently of its former leadership. “[The passed proposal] also hopefully signals to the Netherlands government that Alexey doesn’t run things, so he should be released,” Zoltu said. 

A crucial element of crypto protocols is the idea that developers can deploy open-source code over which they have no control, depending on the implementation. As an extension of this, developers can deploy immutable code which can’t block users from interacting with it. 

Moving forward, the Tornado Cash community has indicated that it will continue to sustain the project despite OFAC’s sanctions. 

OFAC cited money laundering as a reason for imposing sanctions — Lazarus, the North Korea-sponsored hacking group, has been linked to two $100M-plus hacks in the past year and used Tornado Cash in both cases.

‘Unstoppable’

With a successful proposal in the rearview mirror, the project is perhaps testing the resilience of blockchain-based protocols in a way that none have so far. 

Another proposal will follow the first, according to the newly created Tornado Cash Community Twitter account, which bills the protocol as “unstoppable.”

With unprecedented adversity ahead of it, the Tornado DAO is breaking new ground in the crypto space. 

“This is a watershed moment for the resilience of DAOs,” Köppelmann tweeted before the proposal passed. “Can the TornadoDAO, in the face of sanctions and heavy legal uncertainty, continue to operate?”