Is Code Free Speech?

By: Jan Strandberg

This week has been challenging for crypto, especially the decentralized blockchain ecosystem. We have seen one of the most prominent players, Tornado Cash, come under attack by the OFAC (Office of Foreign Assets Control). The whole thing started with OFAC first banning Tornado Cash addresses, then the website and later on prohibiting one of the co-founders from GitHub and eventually arresting one of the co-founders. 

You think this would have been enough to give an example but nope. Circle or USDC, as we plebs all know them, froze the tokens that are currently deposited in Tornado Cash. This is actually the first smart contract-based asset freeze in Circle’s history. And frankly, many other big players followed by blacklisting addresses that have interacted with Tornado Cash.. (Aave, Uniswap and the list goes on).

I will give you a very simple run down for you plebs that have no clue what TC (Tornado Cash) is. Tornado Cash is the most famous smart contract-based privacy transaction tool on the #ethereum blockchain using so-called shielded transactions. For ordinary plebs, this means we can send in transactions, make a new wallet, and hide our original address. Ok, so you might think, “hey, this service is only used for laundering money,” but unfortunately, you are very wrong. Or at least 70% wrong. 

Let’s look at the following graph from Chainanalysis:

Roughly 30% of the funds were coming from not-so-good places. 10.50% came from stolen funds (rug pulls) and 17.7% from sanction list addresses. These addresses could be from hackers, state-run organizations or any source that the US sanctions. If you look at the rest, it’s mostly DeFi and CEX activity. So you might ask why anyone legitimately wants to hide their funds when doing DeFi? 

Well, let’s say you are one of the top exchanges or funds in crypto (Binance, Alameda, Jump Crypto), and you want to ape into some exclusive alpha DeFi farms without anyone noticing and without the prices or total value locked dramatically rising? Well, TC is the best place for you to get your funds mixed and get a new trace. This is crucial when you have a big book because everyone follows your every move in crypto. And all your activities can leak alpha. And this eventually can destroy your position. 

Ok, what about other use cases for TC? Have you ever heard about the “wrench attack”? No? Ok, let me explain. 

What makes crypto so unique is knowing how much another person owns in crypto if you know their wallet address. This is simultaneously a blessing but also a curse. A wrench attack is when an attacker gets to know how much crypto you own. An Attacker might get to know your wallet and send physical threats to you or, even worse, kidnap your family members. 

What about in countries where supporting the anti-governmental movement could be a crime? Let’s take an extreme example, Russia. For instance, I’m a Russian citizen and want to support the Ukrainian movement. From a governmental perspective, that would be very anti-loyal and could give me jail time. But from an individual perspective, it might be the right thing to do, especially if I had a Ukrainian family member. Let’s say my crypto wallets and bank accounts were tracked; my only way to get this crypto money to the right people without noticing would be through TC. Yes, the evil thing that “launders money.” Russian Ethereum founder Vitalik Butterin himself used TC to donate to Ukraine

You see, this whole thing around TC becomes very problematic. What about freedom of speech in countries where there are dictators? How can I support freedom of speech if I can not safely send them money? 

You might say, hey what about regular banks? They would never let something like this happen. Oh boy, I’m sorry to say how wrong you are. Let’s look at the fines the banks paid in 2020, yes, two years ago.  

All of these banks are still up and running. None of their executives are in jail, nor are their operations not running. So what makes Tornado Cash so unique that they should block the operations and arrest the founder? Good question. 

So why does this all matter for the crypto community, especially DeFi? This is the first time OFAC is attacking an open-source code. No one runs Tornado Cash. It’s an open-source application—open-source code. Anyone can take it from GitHub and “fork it.” This OFAC approach is unique because it attacks “freedom of speech.” You might ask, “how is this related to Freedom of speech?”. 

Let me introduce you to the Bernstein v. Department of Justice case. 

https://www.eff.org/deeplinks/2015/04/remembering-case-established-code-speech

This case eventually argued that code is the same as speech, which meant that everyone should have the right to freedom of speech. This was also one of the big reasons Satoshi published Bitcoin as open source. 

This is a MAJOR attack by the government against freedom of speech and DeFi. This also means you, as an individual and an internet user, have fewer rights to be anonymous. TC is an open-source application; no one runs it, yet governments are still attacking the devs and the website. If this is not an attack against freedom of speech, then I don’t know what is. Code should be free speech and especially code that is OPEN SOURCE. 

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