The Australian Securities and Investments Commission (ASIC) has published research it collected during the pandemic on the attitudes and behavior of investors aged 18 and over. Almost half of all survey respondents said they had invested in cryptocurrency, making cryptocurrency the second most common investment only behind Australian shares. Many of them also claimed the crypto as theirs only source of investment exposure to any asset.
ASIC chairman Joe Longo told The Australian newspaper The Age and Sydney Morning Herald that he was disturbed by the findings of this survey and the reported high number of Australians investing in crypto-assets.
Longo said: “If things go wrong, the current regulatory arrangements do not give ASIC much scope to intervene. That’s it [a] very speculative, risky activity and I am concerned that consumers who want to invest in this need to be very clear that if they lose their money there is very little we can do to get it back.”
Australia is not alone in calling out the problem of no clear recourse for investors who have been defrauded or harmed while investing in cryptocurrencies as regulatory officials in the US and other countries note their concerns.
Tornado Cash is sanctioned by the US Treasury Department
Earlier this year, the United States Treasury Department issued the first sanctions of its kind against Blender.io. A cryptoasset mixer was found to be responsible for concealing the source, origin, destination and partners of crypto funds maliciously stolen by North Korea’s Lazarus Group. Then last week, the US Treasury’s Office of Foreign Assets Control (OFAC) issued sanctions against the notorious cryptocurrency mixer for the second time. This time the measures were issued against Tornado Cash, which has been added to the growing list of crypto services and wallets on OFAC’s Specially Designated Nationals (SDN) list.
The new sanctions against Tornado Cash also include 38 Ethereum-based addresses that host Ether (ETH) and USD Coin (USDC). Anyone found not complying with these sanctions could face heavy fines, fines or even possible imprisonment in the most extreme cases.
According to a press release issued by the Treasury Department on August 8, Tornado Cash “has been used to launder more than $7 billion in virtual currency since its creation in 2019. This includes over $455 million stolen by the Lazarus Group, a Democratic People’s Republic hacking group that sponsored by Korea (DPRK) sanctioned by the US in 2019, in the largest known virtual currency heist to date.
“Tornado Cash was subsequently used to launder more than $96 million in malicious cyber actor funds derived from the June 24, 2022 Harmony Bridge heist and at least $7.8 million from the August 2, 2022 Nomad Heist.”
On August 10 – two days after the US Treasury Department issued its own sanctions against Tornado Cash – authorities from the Dutch Fiscal Information and Investigations Office (FIOD) arrested the developer for his connection to Tornado Cash.
According to the press release, the arrested man is “suspected of involvement in concealing criminal financial flows and facilitating money laundering by mixing cryptocurrencies through the Ethereum Tornado Cash decentralized mixing service”. The Australian FIOD’s Financial Advanced Cyber Team (FACT) has reportedly been conducting its own internal investigation into Tornado Cash since June 2022.
Circle – the company behind stablecoin USDC – has since blacklisted the two USDC smart contracts that were affected by the sanctions, freezing around $75,000 in USDC in each of the Tornado Cash contracts that used USDC.
On August 12, Circle’s Chief Strategy Officer and Head of Global Policy – Dante Disparte – posted a blog on the company’s website covering the recent Tornado Cash sanctions. Disparte wrote that “it is indefensible and unsustainable for tools and software to be co-opted by bad actors that go unchecked.
Public blockchains, and the cottage industry of blockchain forensics and financial analytics they enable, provide optionality in financial services for law-abiding people, who should enjoy privacy and financial access as a human right, while giving bad actors and illicit finance no room to hiding .”
In his recent article, Disparte also acknowledged that the use of open source software is an “asset, not a liability” for a more inclusive crypto economy that can preserve an individual’s right to privacy more than it does in other traditional financial services. This is especially true through the use of cryptography, which is a fundamental component of the technical underpinnings of cryptoassets.
Meanwhile, the developers behind Tornado Cash took to social media to respond to the sanctions, reiterating their belief in “users’ natural right to privacy” – a philosophy that many in the crypto community respect. The sanctions reignite the ongoing issue of privacy versus politics as the US shows no signs of slowing its efforts to crack down on entities that help hide illicit funds.
You can read more about the context and significance of these sanctions, as well as how Elliptic’s tools help our customers combat any exposure to sanctioned actors, on Elliptic Connect. We wrote: “Elliptic has taken immediate steps to flag all addresses associated with Tornado Cash within its tools, on all blockchains it operates on. Users of our Elliptic Lens wallet verification tool and our Elliptic Navigator transaction tracker will be able to ensure they are not processing funds commingled using Tornado Cash.”
You can also learn more about this and other issues at Elliptic’s “Preventing Financial Crime in Cryptoassets: 2022 Typologies Report”.
Thailand will give its central bank more powers to regulate cryptocurrencies
Thailand is reportedly changing its regulatory framework to allow the central bank greater oversight over the regulation of the crypto industry. As the law currently stands, Thailand’s central bank only has the authority to notify others that cryptocurrencies are not legal tender for goods and services in the country. Under the proposed revisions, the central bank will have greater powers to regulate the crypto industry that was previously only under the jurisdiction of the Securities and Exchange Commission of Thailand (SEC).
Thailand’s Finance Minister Arkhom Termpittayapaisith told reporters that the country’s current regulatory framework for digital assets is not as clear as it should be for the emerging sector while operating only under the authority of Thailand’s SEC. Termpittayapaisith emphasized that the new regulatory framework will aim to protect investors, not stifle innovation.
Regulation on the implementation of the law on sanctions