FT Cryptofinance: crypto, sanctions and the first change

Welcome to this week edition of the FT. Today we look at crypto mixing services and rights that are anchored in the US constitution.

The sacred first amendment was probably not the area that the US Ministry of Finance had in mind when sanctions imposed on the crypto mixing service Tornado Cash this summer.

In August, the Ministry had enough of Tornado and claimed that it was used to wash more than $ 7 billion and was a preferred channel for Hacker supported by North Korea to avoid sanctions. Mixers like Tornado blur the trace of transfers that normally be in the digital main books that are based on cryptocurrencies.

The results were pretty hard. All transactions that go through the virtual switch of Tornado Cash have been blocked when they affect US users or are carried out somewhere in or through the country. Everyone understood the message: if they are Americans, do not go nearby.

As expected,

crypto-purists were anything but impressed and made known grievances such as state attacks and the violation of the financial data protection rights of individuals.

You are now going one step further with your symptoms. This week Coin Center, a crypto-oriented non-profit research and interest representation based in Washington, filed a lawsuit against the Ministry of Finance and his Office of Foreign Assets Control (OFAC) and claimed that it was not authorized to impose sanctions against Tornado Cash.

The crypto investor David Hoffman, the software developer Patrick O’Sullivan and "John Doe", who was described in the file as a human rights activist who donated crypto to Ukraine.

Will Coin Center get ahead with the lawsuit against one of the most powerful financial criminal authority authorities worldwide? And if not, why do the trouble?

The lawsuit did not really go into the substance of the allegations of the Finance: that Tornado was used as a channel for money laundering.

instead, Coin The Coin is about his view that they are protected by the first constitutional additive to protect the rights of groups (and individuals in them) on freedom of expression. According to the plaintiffs, the criminalization of Tornado Cash violates the constitutional rights of users who "need it to protect their private associations". John Doe fears that Russian agents can find out about his pro-Ukrainian activities and harm him and his family.

This line of attack could not be enough. "I am quite skeptical about the claim of the first constitution..

of course, Coin Center doesn't help. It claims that it is not a criminal and never does business with criminals or terrorists. But it also says: "It is impossible to say whose assets are sent to Coin Centers account when they come from a Tornado cash address." Coin Center refused to comment on how these statements can coexist.

According to FOX, private associations can be maintained without the use of Tornado Cash or another crypto service. “Why don't you exhibit them? That's pretty private. "

Coin The strongest position of the center could be his claim that the Ministry of Finance and OFAC exceeded their powers because tornado bargain was also used for payments between ordinary Americans who only wanted to pass on clean money to each other privately. Fox said this point could be a problem for the government.

Maybe the fight is not about the present, but for the future. "Whether Coin Center is successful or not, it would only improve our blockchain laws and guidelines to strengthen public discourse via open source software tools in general, including those like Tornado Cash," said Teresa Goody Guillén, partner at the US law firm Bakerhostetler.

But maybe, as the founding fathers of America knew, some truths are a matter of course.

like John Reed Stark, former head of the Office of Internet Enforcement of the SEC, told me this week: "The industry is constantly screaming for regulatory clarity, according to certainty, for details, but whenever it gets it, they submit a lawsuit in which they are not what it is."

What do you think of the Coin of the Center against the Ministry of Finance? Mail me to scott.chipolina@ft.com .

Weekly highlights

• As the saying says: If it rains, it pours and the Solana country is very wet. Last week I asked where the network would go after a number of the latest failures, and this week the Solana-based Defi-platform Mango Markets was hacked for $ 100 million. When the list of defi-hacks, which increases longer ever longer, the team of Mango Markets clarified that "the Orakel price reporting worked as they should have worked"-a detail that Certainly a lot of confidence in the alleged future of financial system will arouse.

• France made crypto headlines again this week after welcoming the exchange platform Crypto.com to its banks. The registration of the platform as a digital asset service provider at the authorité of the Marchés Financiers (AMF) follows the registration of Binance in the EU member state months earlier.

• meta continues shift the limits of technology . If you plan to move your life in Meta Horizon Worlds, you can look forward to. . .* Check notes*. . . Have legs. An attentive Twitter user pointed out the crazy A popular American football video game, in 1994 performed the same performance, which in my opinion takes away the legs.

• The review of the obvious role of crypto in the weakening of economic sanctions does not decrease. This week, the Bittrex stock market platform agreed to pay $ 29 million in order to accommodate enforcement cases with the US authorities due to "obvious violations" against sanctions against countries such as Iran, Cuba and Syria. Read about it here.

• Binance was accused by the co-owner of a British subsidiary of having submitted a "gross inaccurate" annual report for a British company that is connected to the crypto exchange. The allegation follows the public dispute with Binance with the Financial Conduct Authority last year. Read more here.

Soundbite of the week: Tether

The Commercial Paper, which was not described in more detail, which supported the largest stable coin in the world, has long attracted speculations. No more.

"Tether is proud to announce that we have completely eliminated Commercial Paper from our reserves. This is proof of our commitment to infer our tokens with the safest, the most liquid reserves on the market."

So nothing to do with the 4.4 percent interest that are offered for short-term US treasuries? Let us hope that this also accelerates the long -awaited audit.

data mining: coinbase problems continue

whether it is a job cuts, internal disputes or disputes with supervisory authorities, 2022 was a difficult year for coinbase.

The latest data published by the analysis platform CryptoCompare show that the dynamics still have to reverse because it is preparing to announce the profits for the third quarter on November 3. The monthly cash down volume on the stock exchange decreased by 17 percent to $ 48 billion, compared to USD 120 billion at the beginning of the year. The spot trade volume has now reached the lowest level since December 2020.

Additional data from CryptoCOMPARE show that the monthly cash down volume for Binance, FTX and OKX has increased in the same period.

Maybe the documentary about Coinbase and his co -founder Brian Armstrong will rethink people. Mind you, The Atlantic was not a fan.