TLDR
- Keyring’s zkVerified vaults fund Tornado Cash developers’ legal defense.
- Ethereum Foundation pledges additional $500K to Tornado Cash case.
- Fees from Keyring vaults support privacy developers facing legal challenges.
- Tornado Cash creators are charged with facilitating money laundering.
The Ethereum Foundation has joined forces with Keyring Network to create a novel funding mechanism aimed at supporting the legal defense of Tornado Cash developers, Roman Storm and Alexey Pertsev. This new initiative redirects fees from Keyring’s zkVerified vaults to provide financial assistance for the developers, who face charges related to their involvement in creating the privacy-focused mixer Tornado Cash.
New Funding Model for Legal Defense
Keyring Network has introduced zkVerified vaults, a tool that allows institutional investors to access decentralized finance (DeFi) products in a compliant manner using zero-knowledge proofs. The vaults, which are yield-generating and secure, will direct all fees generated in the first two months to the legal defense funds of the Tornado Cash developers.
The initiative is a collaboration between Keyring Network and the Ethereum Foundation. The Foundation plays a strategic role in coordinating the effort, aiming to establish a model that could be used for future cases involving open-source developers facing legal challenges. The project also seeks to address the growing need for a sustainable funding structure to support developers’ legal defense costs.
Tornado Cash Developers Facing Legal Charges
Roman Storm and Alexey Pertsev, along with Roman Semenov, created Tornado Cash, an Ethereum-based privacy tool designed to enhance transaction anonymity. The protocol enables users to obscure the origin and destination of cryptocurrency transactions, offering greater financial privacy. While Tornado Cash was celebrated by privacy advocates, critics pointed out its potential use for illicit activities like money laundering.
In 2022, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash, accusing it of facilitating money laundering for criminals, including state-sponsored hackers.
As a result, Pertsev and Storm were arrested and charged with money laundering and operating an unlicensed money transmission business. Their legal battle has raised concerns within the crypto community about the risks developers face when creating open-source software that may be used for unintended purposes.
A Sustainable Funding Structure for the Future
The new initiative by the Ethereum Foundation and Keyring aims to create a self-sustaining financial model for the legal defense of developers involved in privacy-focused projects. The funding mechanism ensures that resources will flow to future legal challenges automatically, based on the success of privacy protocols like Tornado Cash. This approach reduces the need for emergency community donations, which can often be unpredictable.
The Ethereum Foundation has pledged an additional $500,000 to help cover the legal expenses of the Tornado Cash developers. This funding will complement the fees from the zkVerified vaults, which Keyring Network has agreed to allocate for two months to support the defense. The goal is to establish a model that can be replicated in the future, providing a reliable way to fund legal defenses for privacy developers without relying on sporadic donations.
The Role of Keyring Network in the Initiative
Keyring Network, known for its focus on compliant decentralized finance solutions for institutional investors, is playing a key role in this initiative. The company’s zkVerified vaults provide a secure gateway for institutional investors to engage with DeFi products while maintaining compliance with regulatory requirements.
These vaults also offer a way to fund important causes like the legal defense of developers, which is part of Keyring’s broader mission to support privacy-focused innovation in the blockchain space.
By linking the vault fees directly to the Tornado Cash defense, Keyring is helping create a new model of funding that aligns with the success of privacy technologies. This approach could provide an ongoing source of financial support for developers who may face legal challenges in the future, helping to protect the integrity of open-source projects and the privacy rights of users.
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