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Vitalik Buterin donates 30 ETH to Tornado Cash legal defense as he develops a 'compliant' version

Buterin's involvement signals a strong stance on maintaining crypto transaction privacy.

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Ethereum co-founder Vitalik Buterin has made a significant donation of 30 Ether (approximately $114,000) to support the legal defense of Alexey Pertsev and Roman Storm, the developers behind the controversial crypto mixer Tornado Cash.

Simultaneously, Buterin is working on a new Ethereum-based crypto mixer designed to be compliant with anti-money laundering laws.

Alexey Pertsev, one of the Tornado Cash developers, was recently sentenced to more than five years in prison by a Dutch court for his involvement in a $2.2 billion money laundering case. Roman Storm, another Tornado Cash developer, is set to face trial on similar charges in a US court in September. Their cases have garnered significant attention from privacy advocates and the blockchain community, who fear that developers may be held liable for the misuse of their code by third parties.

The conviction of Pertsev has also raised concerns about the future of smart contracts used in anonymizing platforms, as the Dutch court ruled that he was responsible for the actions of those using Tornado Cash’s technology, despite the autonomous nature of smart contracts.

Several prominent entities in the cryptocurrency industry have rallied to support the Tornado Cash developers. Coinbase, the Blockchain Association, and other trade associations have submitted amicus briefs in support of Roman Storm. Matter Labs, the developer group behind the ZKSync layer 2 network, has donated $100,000 to the developers’ legal defense, while the Uniswap DAO is considering a donation of up to $1.5 million in UNI tokens.

Data from decentralized funding platform Juicebox indicates that the onchain legal defense fund has already garnered $2.2 million in donations.

In parallel to his support for the Tornado Cash developers, Vitalik Buterin is collaborating with other researchers, including Ameen Soleimani, to develop a new crypto mixer called Privacy Pools. This unique mechanism, outlined in a 2023 paper, aims to allow users to maintain their privacy without offering criminals a completely clean source of crypto funds.

Privacy Pools will enable users to opt out of mixing their funds with potentially ill-gotten gains, addressing the concerns raised by regulators and law enforcement agencies regarding the use of crypto mixers for money laundering and other illicit activities.

The development of Privacy Pools and Buterin’s support for the Tornado Cash developers highlight the ongoing efforts within the DeFi community to balance the cypherpunk ethos of privacy and decentralization with the need for compliance with anti-money laundering laws.

As major Wall Street players like BlackRock and Fidelity show increasing interest in the DeFi sector, projects like Privacy Pools and 0xbow, which is implementing the Privacy Pools concept, show an ongoing commitment to finding solutions that maintain user privacy while adhering to regulatory requirements.

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