Tornado Cash Devs Will Not Receive Funds By Arbitrum DAO

Arbitrum DAO decided against proceeding with its recent proposition to contribute funds, up to $1.2 million, to support Tornado Cash developers Roman Storm and Alexey Pertsev amid their legal battles, according to a source familiar with the situation. Last week, ImmutableLawyer, a contributor to Arbitrum, suggested allocating between 200,000 and 600,000 ARB tokens, valued at $400,000 to $1.2 million, to aid the legal defense of the developers.

Tornado Cash In Hot Water

Storm and Pertsev are currently facing legal charges linked to their creation and advancement of Tornado Cash, a smart contract protocol designed to conceal cryptocurrency transactions on the Ethereum network. The exploitation of the protocol by criminals for money laundering purposes has attracted considerable legal scrutiny.

Despite the withdrawal of the proposal, supporters are exploring alternative means to provide financial support. One such option being considered is directing funds through Coin Center, a nonprofit organization focused on cryptocurrency policy, to back the fundraising efforts of WeWantJusticeDAO, aiming to cover estimated monthly legal expenses of $100,000.

Bad To Worse

In August 2022, the US Treasury imposed sanctions on Tornado Cash, a crypto-mixing service, over allegations of laundering funds for malicious cyber actors like the Lazarus Group. These sanctions resulted in the freezing of Tornado Cash assets, restrictions on transactions involving the service, and the prohibition of its code.

The actions of the Treasury have sparked concerns regarding privacy implications and the potential closure of similar services in the future. Some individuals have contested these sanctions through a lawsuit funded by Coinbase against the US Treasury Department. Moreover, on February 14th, GoFundMe terminated a fundraising campaign aimed at gathering legal defense funds for Storm and Pertsev due to a violation of its terms of service.