A Suggestion for Innocent Users Affected by the Recent Ban on Tornado Cash

With Criminals Incriminating Innocent Addresses Following the Ban on Tornado Cash, What Can Users Do to Protect their Wallets? Fairyproof…

With Criminals Incriminating Innocent Addresses Following the Ban on Tornado Cash, What Can Users Do to Protect their Wallets? Fairyproof Offers a Sound Solution.

Recently, the US Government had banned Tornado Cash and added a list of addresses related to criminal activities in OFAC’s SDN List. However, various malicious actors had leveraged on the ban to send tainted assets to innocent addresses.

It was reported that several famous crypto users (KOLs) had experienced access restrictions from popular DeFi applications like AAVE and Uniswap days following the public announcement of Tornado Cash’s ban.

As of now, it is hard to tell whether a transaction that was sent from a banned Tornado Cash address to a seemingly innocent one counts as a laundry transaction or as a target to taint the innocent address on purpose.

Regardless, we can still find clues and help innocent users take actions to fight against malicious acts against their accounts.

The key reason the US Government had banned Tornado Cash is that the platformed was used to illegally launder crypto assets by criminals. Eventually, these criminals would extract these assets from the platform and from innocent accounts. Consider this: What if an innocent account would burn the assets they have received from an addresses that had been blacklisted? We figured that this course of action would help innocent addresses disassociate themselves from the legal concern to some extent.

Based on this logic, our technical team would propose a solution for innocent users to protect their assets and addresses for those who have been tainted by transactions sent from Tornado Cash:

1) The Existing M.O. of Tornado Cash’s Implementation Involves Only Sending ETHs in Incremental Amounts of 0.1, 1, 10, etc.

Hence, when a user receives an amount of increments of 10s (0.1 ETH, 1ETH, or 10ETHs) from an unidentified address, chances are, it might be from a Tornado Cash-related address.

2) After the Ban became Effective, Popular Explorers like Etherscan have Marked Tornado Cash-Related Addresses.

So, if a transaction was conducted by a Tornado Cash-related address, Etherscan will indicate the transaction by marking its sending address as “Tornado Cash”. That way, if a user suspects their account to be involved with a Tornado Cash transaction, they can verify through Etherscan if their addresses have received 0.1 ETHs, 1 ETH, or 10 ETHs from an address marked “Tornado Cash”.

If the transactions are present, the user can proceed to send the total amount of ETHs received from Tornado Cash to the dead address (0x0…0) on Ethereum and add a statement in the “transaction’s input data”, indicating that the user was unaware of these transactions. Doing so would show that the user has at least burned all the assets he/she have received from Tornado Cash.

This two-part solution would be the best course of action to help users legally protect their addresses. Even if the innocent user would be deemed an unconscious acquaintance to hackers, this transaction or act of “burning” would show that he / she would not be able to use Tornado Cash to exploit assets. Users who adopt this solution would also have proof to clarify their innocence if their accounts are suspected to be linked to Tornado Cash’s money laundering efforts.