New U.S. Crackdown Has Crypto Users Worried About Their Privacy

The battle between the crypto community and the U.S. government over financial privacy just escalated dramatically, amid government efforts to crack down on criminals.

Tornado Cash is a service that helps some cryptocurrency owners protect their anonymity by scrambling information trails on the blockchain. On Monday, the Treasury Department prohibited Americans from using the service, arguing that it has played a central role in the laundering of more than $7 billion.

In a statement, the Office of Foreign Assets Control (OFAC), a Treasury Dept. agency, called Tornado Cash “a significant threat to the national security” of the United States, and alleged that it has been used repeatedly by North Korean hackers to launder money from multiple million-dollar thefts.

But the decision drew vicious backlash from many in the crypto community, who see it as a governmental overstep that runs contrary to their core values of privacy and autonomy. On Twitter, the crypto lawyer Collins Belton called it “arguably the most significant legal action that has occurred in crypto” and warned that it could produce “absolutely gargantuan ripple effects.”

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