Robert Steinadler, 8 months ago

Protests: Dust attacks on Justin Sun, Logan Paul, and other prominent figures

A dust attack or dusting is a method where the attacker sends a small amount of cryptocurrency to its victim. While sending a gift in crypto sounds harmless it can have a lot of implications. Users usually don’t notice tiny amounts and attackers use that method to track down the owner of the wallet by monitoring where the dust is transferred subsequently after being received. The most recent dust attack is quite different but it seems that it is highly effective.

Why are users sending Ether to prominent figures using Tornado Cash and how is that impacting their ability to participate in the market?

Crypto community upset after arrest

Last Wednesday a developer of Tornado Cash was arrested in Amsterdam after the US sanctioned the Ethereum tumbler. It is not exactly clear what the allegations are since the suspect has only contributed to the code of the open-source software. The US claims that high-profile hacking groups have used Tornado Cash for money laundering.

This raises the question if any person that helped programming Tornado Cash is guilty of money laundering, too. Most of the crypto community begs to differ and many people are upset about the arrest and the fact that governments would go after developers. Some even argue that this is an attack on freedom of speech since code is another way for humans to express themselves.

Aside from these reactions, the case raises a lot of legal questions and the outcome will most likely determine how similar cases and software will be viewed in the future.

Tornado Cash remains available

US agencies have gone beyond and above to turn down any website, repository, or social media profile that was directly affiliated with Tornado Cash and its team. The problem for investigators is that the software is based on robust and decentralized technology which makes it really hard if not impossible to shut it down for good.

The Ethereum tumbler remains accessible and nothing has really changed. Except for the OFAC sanctions list that contains all the addresses affiliated with the mixer. Most major DeFi applications have already reacted and are monitoring the Ethereum network. Not only did they ban the addresses on the list but they also block addresses that have interacted with Tornado Cash.

This has opened Pandora’s box. Because now every person on this planet is able to ban Ethereum addresses from using these protocols by simply sending ETH via Tornado Cash.

Justin Sun becomes a target

Justin Sun is rich and an active user of DeFi applications on several blockchains. An unknown user started a dust attack on Suns Ethereum wallet which resulted in a ban. Sun complained via Twitter that he is no longer able to access Aave and the funds that he is holding there. Several hours later the issue was resolved. Less prominent users might face more struggle to get their access restored in such a short amount of time.

Other prominent crypto users who became victims are Logan Paul, Steve Aoki, and even Coinbase CEO Brian Armstrong. It remains unclear if there are any legal implications. Technically US citizens receiving Ether from Tornado Cash are violating the OFAC sanctions.

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Many people believe that Bitcoin is anonymous and that nobody can see who is behind each Bitcoin address. That is true to some extent but with blockchain analysis there is a tool available that can reveal the origin of funds. Most crypto companies use such services to block funds that originate from dubious sources such as Darknet marketplaces. Criminals are creative and responded with so-called Bitcoin tumblers to disguise their digital trails.

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