Tornado Cash ban could spell disaster for other privacy protocols — Manta co-founder

cointelegraph.com:

There are mounting concerns that recent United States government sanctions against Tornado Cash will become a “slippery slope” for Web3 privacy that could eventually make the entire space “meaningless.”

Speaking to Cointelegraph, Shumo Chu, co-founder of privacy protocol Manta Network expressed worry that the strict sanctions against Tornado Cash could have a knock-on effect on every Web3 protocol including ones providing privacy.

Chu is one of the co-founders of Polkadot-based Manta Network, a layer-1 privacy protocol that enables private transactions in decentralized finance (DeFi).

Tornado Cash (TORN) is an Ethereum (ETH) privacy protocol that anonymizes coin transactions. These protocols are similar to Monero (XMR) and Zcash (ZEC) which masks sender and receiver data of crypto transactions.

Earlier this month, the U.S. Treasury Department effectively barred US residents from using the protocol and placed 44 ETH and USD Coin (USDC) addresses associated with it on the list of Specially Designated Nationals on Aug. 5.

Chu expressed worry that other privacy protocols like his could wind up in the same crosshairs, which would add more censorship to the point it would “essentially make the entire Web3 space meaningless.”

Chu acknowledged that the U.S. government ban was done ostensibly in the interest of national security as the North Korean hacker group Lazarus has been known to use Tornado to launder the funds it steals.

But in banning the protocol, Chu questioned regulators’ understanding of how decentralized systems based on open-source code can be located and operated anywhere.

Last week, Dutch police arrested a Tornado Cash developer they suspect is involved in money laundering.

Chu added that there have been instances in