When the U.S. government sanctioned the Ethereum-based crypto mixing service Tornado Cash in 2022, it ignited a debate within the crypto community that continues three years later.
Tornado enabled users to transfer crypto anonymously. The government contended that the service facilitated money laundering, prompting some of Ethereum’s validators and block builders to take steps to avoid engaging with Tornado-linked transactions, which made the service slower and costlier to use.
Advocates argued that complying with the sanctions amounted to censorship — undermining a fundamental cypherpunk principle. President Donald Trump supported the cypherpunks and lifted the sanctions on Tornado Cash in March of this year, but for some Ethereum developers, the situation highlighted a flaw within the network that still exists today: Why should users depend on third-party apps to transact privately on the network?
„Publicly accessible transaction graphs allow anyone to trace the flow of funds be
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