Arbitrum confirms removal of funding for Tornado Cash legal defense


  • The Arbitrum DAO canceled a proposal to fund Tornado Cash developers’ legal defense.
  • The proposal aimed to use $1.3 million in ARB tokens for Roman Storm and Alexey Pertsev’s defense and privacy tech advocacy.
  • DK, a pseudonymous delegate, introduced the proposal but later asked for its removal.
  • Tornado Cash is accused of laundering over $1 billion, including funds linked to the Lazarus Group.

The Arbitrum DAO recently made a decisive move by scrapping a proposal aimed at providing financial backing for the legal defense of Tornado Cash’s developers. This contentious plan had proposed channeling close to $1.3 million in ARB tokens from the community’s reserves to assist Roman Storm and Alexey Pertsev. These individuals are closely linked with Tornado Cash, a cryptocurrency mixer embroiled in legal troubles. The proposal extended to cover costs related to public relations and advocacy for technologies ensuring privacy.

How it actually happened

This initiative saw the light of day thanks to DK, a delegate operating under a veil of anonymity, who put forward the proposal on March 7. DK advocated for a strong legal defense for the implicated developers. However, in a turn of events, an Arbitrum spokesperson revealed that this proposal was retracted at the request of DK themselves.

“I can confirm that the forum was removed at the request of the author of the proposal,” stated the spokesperson. The mystery covering this retraction remains, with attempts to reach DK for comments hitting a dead end as of now.

Tornado Cash and its founders find themselves at the center of severe allegations, accused of laundering more than $1 billion of illicit funds. This staggering sum includes funds traced back to the Lazarus Group, a notorious hacking entity. The charges laid against the developers are severe, spanning money laundering, sanctions violations, and operating without a proper money transfer license.

Amid these accusations, a screenshot from March 8, captured from Snapshot/Arbitrum DAO, memorializes the now-defunct proposal. The legal quandaries for Tornado Cash’s creators aren’t limited to this failed funding attempt. Pertsev found himself under arrest in the Netherlands in August 2022, with Storm facing apprehension by the FBI in August 2023. Roman Semenov, another co-founder, remains beyond the grasp of law enforcement.

Tornado Cash’s legal maze and community reactions

Supporters of Tornado Cash maintain that the platform merely furnishes software for decentralized money transfer and doesn’t actively partake in the transfer process itself. The crackdown on Tornado Cash has been perceived as a direct threat to developers engaged in creating privacy-centric applications.

The tale of financial woes for these developers is compounded by the cancellation of a GoFundMe campaign intended to amass legal funds for Storm and Pertsev on February 16. The crowdfunding platform pulled the plug, citing potential risks to its operations, employees, and users stemming from a violation of its service terms.

Cybercrime, with a focus on crypto ransomware, reflects a marked evolution in threats to crypto security. Chainalysis, a pioneer in blockchain analytics, brings to light a startling reality where ransomware payments have breached the $1 billion mark. This surge underscores a notable uptick in cyberattack frequencies.

Adding complexity to this, Tornado Cash has seen a revival in usage despite facing heavy sanctions. This resurgence points to an adaptive streak within cybercriminal factions, continually evolving to sidestep regulatory measures.

Eric Jardine from Chainalysis expressed astonishment over this development, highlighting the unexpected comeback of Tornado Cash in these trying times. This comeback challenges regulatory bodies, showcasing the nimble tactics of cybercriminals in navigating sanctions.

Moreover, the creation of 583 new ransomware variants within a year signals a rising tide of threats looming over the cyber and cryptocurrency security horizon. Kim Grauer of Chainalysis remarked on this significant escalation, noting the unprecedented level of ransomware activity observed.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Jai Hamid

Jai Hamid is a passionate writer with a keen interest in blockchain technology, the global economy, and literature. She dedicates most of her time to exploring the transformative potential of crypto and the dynamics of worldwide economic trends.

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