Anti-Money Laundering Laws & the Crypto Ecosystem
Recently, the Office of Foreign Assets Control (OFAC) of the US Treasury Department added 45 public Ethereum addresses to the sanctions blacklist.
These included addresses where the Tornado Cash smart contract was stored. Interestingly, TORN is not a legal entity, it is a decentralized, immutable, non-custodial smart contract.
The reason for the sanctions? TORN is a currency mixing service linked to over $1 billion in illicit transactions, especially by North Korean hackers.
It is to be seen if the courts uphold OFAC's power to sanction smart contracts instead of only persons or entities.
Interestingly, Alexey Pertsev, a TORN developer has been arrested for facilitating money laundering via the Tornado Cash app.
This could lead to legal troubles for more 'base layer' crypto participants such as validators, builders, pool operators, relays, searchers, and sequencers.
This could also make it mandatory for US-based miners & validators to censor transactions involving blacklisted addresses. And that could lead to the forking of popular blockchains!
Closer home, many of India's top centralized crypto exchanges are being investigated for violating anti-money laundering laws.
If you would like to learn more about Anti-money Laundering laws, especially in the context of Crypto transactions, join my Blockchain Law course: https://www.asianlaws.org/blockchain-law.php
The first batch starts on Saturday 8th October.