Tornado Cash US Ban Is ‘Bad Precedent,’ but Monero Was ‘Made for This’: Cake Wallet Exec

The future of privacy tools has been threatened as a result of the U.S. sanctioning coin mixer Tornado Cash, according to one executive at a leading Monero-focused crypto wallet software company.

Justin Ehrenhofer, vice president of operations of Nevis-based Cake Wallet, told CoinDesk TV on Monday the sanction is a “step backwards” for open-source tools.

“I feel uneasy with the recent actions,” Ehrenhofer said on CoinDesk TV’s “First Mover” show. “I don’t like them at all.”

Ehrenhofer’s comments come after the sanctioning of Tornado Cash by the U.S. Treasury Department. Blocking all U.S. persons from using the crypto mixing service has created concerns about privacy when transferring coins between blockchains.

“I think it’s the wrong idea to try and sanction open-source tools,” Ehrenhofer said.

The executive at the hot wallet-based open-source project said users in the Monero community fear the possibility the U.S. government could shut down their project, too.

“It’s definitely a valid concern,” he said.

Monero (XMR) is a digital currency that lets users make and receive transactions anonymously. Its decentralized protocol is used by many to maintain their privacy in transactions. “It’s meant to be censorship resistant,” Ehrenhofer said.

He criticized government attempts to go “after the entire network” rather than sanctioning individual smart contract addresses. In Tornado Cash’s case, all U.S.-based users were banned from interacting with the coin mixer or any of the Ethereum wallet addresses tied to its protocol.

Ehrenhofer said the government will need to respond in “a way that allows individuals to retain their right to transact.”

And while it still remains unclear what Tornado Cash's ban could mean for other privacy tools in future, it does create “a bad precedent,” Ehrenhofer claimed.

“It’s hard to develop mass surveillance on the blockchain,” he said, referring to the potential government sanctions of privacy tools in the future.

Meanwhile, upgrades continue for the Monero system, whose privacy coin is currently valued at nearly $3 billion. Over the weekend, the Monero protocol created a hard fork that includes a number of upgrades intended to preserve user privacy.

Upgrades include an increase in ring signatures from 11 to 16. The revamp is intended to increase the number of signers per transaction. In addition, the protocol has undergone an upgrade to its “Bulletproof” algorithm, which will improve the size of transactions in an effort to make them “more private and more efficient.”

Read more: What the Tornado Cash Sanction Means for Privacy Coins