The Arbitrum DAO has decided not to proceed with its recent proposal to allocate funds, up to $1.2 million, to support Tornado Cash developers Roman Storm and Alexey Pertsev in their legal battles, as per 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 assist in the legal defense of the developers.
Tornado Cash Facing Legal Challenges
Storm and Pertsev are currently embroiled in legal disputes related to their development and promotion of Tornado Cash, a smart contract protocol designed to obfuscate cryptocurrency transactions on the Ethereum network. The exploitation of the protocol by criminals for money laundering has drawn significant legal scrutiny.
Despite the withdrawal of the proposal, supporters are exploring alternative avenues to provide financial assistance. One such option under consideration is directing funds through Coin Center, a nonprofit organization focused on cryptocurrency policy, to support the fundraising efforts of WeWantJusticeDAO, with the aim of covering estimated monthly legal expenses of $100,000.
Escalating Issues
In August 2022, the US Treasury imposed sanctions on Tornado Cash, a crypto-mixing service, alleging it had laundered funds for malicious cyber actors like the Lazarus Group. These sanctions led to the freezing of Tornado Cash assets, restrictions on transactions involving the service, and the prohibition of its code.
The Treasury’s actions have raised concerns regarding privacy implications and the potential closure of similar services in the future. Some individuals have challenged these sanctions through a lawsuit funded by Coinbase against the US Treasury Department. Additionally, 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.
