Tornado Cash Legal Defense Funded by a Joint Initiative Launched by the Ethereum Foundation
Keyring Network and the Ethereum Foundation have started a new project to provide a finance mechanism that is in line with the market. The money collected from zkVerified DeFi vaults will be utilized to help open-source developers that prioritize privacy.
Institutional DeFi Funds Privacy Defense
A financing mechanism for privacy development has been developed by the Ethereum Foundation and Keyring Network.
Keyring is a business that specializes in developing technologies that provide access to compliant decentralized finance (DeFi) products for major financial institutions. On the Ethereum blockchain, they specialize in employing sophisticated zero-knowledge proofs that let individuals demonstrate their authenticity without disclosing who they are.
Keyring just created zkVerified vaults, which are safe, yield-producing DeFi gateways that are only available to investors that have been safelisted.
The collaborative effort seeks to support the defense of open-source, privacy-enhancing programming by providing funding for the legal defense of Tornado Cash developers Alexey Pertsev and Roman Storm.
In order to support the developers directly, Keyring has pledged two months’ worth of all protocol fees from its new zkVerified vaults. In the meanwhile, the strategic partner is the Ethereum Foundation. A successful test case for this new funding model will be established and coordinated by the Ethereum Foundation.
Developers Convicted for Open Source Code
Tornado Cash is an open-source cryptocurrency mixer built on the Ethereum blockchain that was developed and released in 2019 by Storm, Pertsev, and Roman Semenov. The service greatly improves the anonymity and privacy of user transactions.
Its establishment was primarily motivated by the claimed goal of giving bitcoin users financial privacy. Tornado Cash was developed to separate the sending and receiving wallets because Ethereum transactions are open to the public.
Vitalik Buterin and other supporters praised the development, seeing it as essential for financial privacy. Critics countered that it may be used by criminals, such as highly skilled North Korean hackers, to launder billions of dollars in illegal funds.
Tornado Cash was sanctioned by the US Treasury’s Office of Foreign Assets Control (OFAC) in August 2022. Additionally, it prohibited Americans from using the protocol. Following their arrest, Pertsev and Storm were accused of running an unauthorized money transmission business and aiding in money laundering.
For these offenses, courts found Persev and Storm guilty. Roman Semenov is still out there.
An Alarming Standard
Significant legal expenditures have been incurred as a result of the lawsuits brought against Tornado Cash’s developers.
Many in the crypto community believe that the case is creating a risky precedent that might criminalize developers for merely authoring open-source code.
In addition to this new strategic partnership with Keyring, the Ethereum Foundation announced in August that it will donate an additional $500,000 to support the developers’ legal defense.
For the industry as a whole, this new project is a crucial proof of concept. If this new model is effective, it will end the need for emergency, one-time community donations for any future legal disputes by establishing a durable, market-driven funding mechanism that automatically channels the financial success of privacy standards.
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