On an Ethereum smart contract level, stablecoin issuers can prohibit interactions with the Tornado Cash DApp.
According to crypto data aggregator Dune Analytics, Circle, the creator of the USD Coin (USDC) stablecoin, frozen over 75,000 USDC worth of funds linked to 44 Tornado Cash addresses that were blocked by the Specifically Designated Nationals and Blocked Persons (SDN) list of the U.S. Office of Foreign Assets Control on Monday. On the Ethereum blockchain, Tornado Cash is a decentralized application or DApp, that is used to obscure the history of past cryptocurrency transactions.
The USDC and Ether smart contract addresses for the cryptocurrency mixer on the SDN list are not accessible to any U.S. individuals or companies. Willful disobedience is punishable by fines of $50,000 to $10,000,000 and jail terms of 10 to 30 years. Stablecoins, Ethereum, and wrapped Bitcoin (WBTC) totaling around $437 million are now held in Tornado Cash’s smart contract addresses. Because of this, issuers must take measures to stop the sale or redemption of such assets.
Circle Freezed Blacklisted From Cash Smart Contract Addresses:
On the level of an Ethereum smart contract, both the organizations behind USDC and Tether can halt stablecoin transactions to and from Tornado Cash. To comply with such fines, BitGo, situated in Palo Alto, California, would conceivably also have to impose access restrictions on Tornado Cash. Suspending the redemption of WBTC tied to Tornado Cash is one option.
According to anonymous DeFi educator BowTiedIguana, the new Tornado Cash punishments are universal for people and organizations in the United States. Simple actions like making donations using Gitcoin, working on the project, using or downloading its software, accessing its website, and depositing into or extracting from smart contracts could all be seen as infractions.