Sound Off: Will Tornado Cash Sanctions Shake the DeFi World?Ari Redbord Sounds Off on 'Exceptional' Tornado Cash Sanctions
"Sound Off" is a new video series that explores one topical question, in depth, in under 10 minutes, with information security and privacy leaders.
On Aug. 8, the Department of the Treasury froze the assets of Ethereum blockchain cryptocurrency mixer Tornado Cash, stating that civil and potentially criminal penalties await anyone under U.S. jurisdiction who uses the service. On this week's "Sound Off," Ari Redbord, a former Treasury Department senior adviser and now the legal and government affairs lead at the blockchain analytics firm TRM Labs, explains why the sanctions are "exceptional."
Redbord, an ISMG contributor, says: "I think the other thing that really makes it exceptional is that unlike smaller crypto services or really sort of illicit actors in the space, Tornado Cash is used by regular users who are looking to enhance privacy in a more and more open financial system and I think that's really where this sort of interesting paradox lies.
"The real key for regulators and really the crypto space is: How do we stop illicit actors from taking advantage of decentralized protocols but at the same time not affect regular legitimate users who need a degree of privacy?"
In a video interview with Information Security Media Group, Redbord discusses:
- The difference between the sanctioning of the two cryptocurrency mixers, Tornado Cash and Blender.io;
- The challenges of sanctioning open-source crypto software such as Tornado Cash;
- Questions for regulators in the move toward an increasingly open decentralized financial system.
Prior to joining TRM, Redbord served as a senior adviser to the deputy secretary and the undersecretary for terrorism and financial intelligence at the U.S. Department of the Treasury.
Don't miss our previous installments of Sound Off, including the March 14 edition with former federal CISO Grant Schneider, who outlines the OMB's latest cybersecurity guidance, and the March 21 edition with identity expert Jeremy Grant, who discusses the gaps that the executive order on identity theft must address.