The United States government’s sanctions against Tornado Cash have rekindled a public discussion on privacy. Many people in the still-emerging crypto community view the federal government’s engagement as revolutionary. But conflicts between the private sector and the government over privacy are nothing new, and they can offer fascinating insights into what the future of privacy in the crypto business might hold.
One of the earliest applications for public-key cryptography with end-to-end (E2E) encryption that was made freely available was Pretty Good Privacy (PGP), which was created by Phil Zimmermann in the 1990s. Because of Zimmerman’s invention, a criminal inquiry that was later discontinued led to federal court rulings that safeguard encryption under the First Amendment of the United States Constitution. This conflict over privacy issues was named.
Officials from the US and other nations are encouraging big internet companies to forego robust E2E encryption in their products as the encryption conflicts continue. This would give law enforcement access to a wide range of highly sensitive personal information.The punishment against Tornado Cash by the Office of Foreign Assets Control (OFAC) marks the beginning of the next chapter in the encryption wars. The Financial Crimes Enforcement Network, another branch of the Treasury, had previously distinguished between “suppliers of anonymizing services” and “anonymizing software providers,” but the OFAC sanction eliminates that distinction altogether .
Congressman Tom Emmer addressed a letter to Treasury Secretary Janet Yellen last month asking for further information on the penalties after pointing out that software can be disconnected from a business that is managed by a group or an individual. Since Edward Snowden revealed the bulk surveillance methods used by the National Security Agency, this decision represents one of the most important privacy conflicts.
The penalties are reminiscent of times when PGP was employed as a justification for a complete ban on data encryption. Fortunately, the prohibition ultimately failed and was replaced with innovations like secure logins, internet commerce, and personal communication. A similar precedent would be set if the sanctions against Tornado Cash were upheld, suffocating technological advancements and any related economic development behind a mountain of bureaucracy. Or, to put it another way, criminals have used technological advancements for illegal behaviour throughout history, thus outlawing the technology would be