War on Crypto! From Ethereum Mixers to Media Newsletters

On Monday, the U.S. Treasury Department added Tornado Cash to its blacklist, banning American citizens from using the crypto mixing site because it "has been used to launder more than $7 billion worth of virtual currency since its creation in 2019." Separately, on Tuesday, we at Decrypt woke up to find that our newsletter provider Mailchimp had deactivated our account with no warning—and our reporting discovered Mailchimp had done the same to a bevy of other crypto publishers in the past couple weeks, including Messari and Edge Wallet.

Those two events vary vastly in scale, obviously. The Tornado Cash sanctioning is enormous news that has rocked the crypto industry, while our newsletter plight is of little interest to anyone outside crypto media. (And shame on us for using Mailchimp in the first place, since the company had done this before, banning a slew of crypto accounts back in 2018.)

But they're part and parcel of a broader anti-crypto movement, from government to corporations—and the backlash will extend to open-minded normies soon if it doesn't turn around.

People in power really, really hate crypto.

The current brutal bear market—specifically the collapses of Terra, Celsius, and other junky projects and companies that people in crypto know should not be taken as representatives of the entire industry—have handed crypto haters a series of events they can point to as evidence that the entire industry is a fraud, a scam, a Ponzi, a joke.

The government's conclusion appears to be even worse: crypto is a tool for criminals. Never mind that there are a range of legitimate privacy-oriented reasons to use a crypto mixer like Tornado Cash.

Now the Tornado Cash sanctioning is becoming a litmus test for whether projects and companies want to fall in line immediately, or fight through non-compliance. It is a test that, from the perspective of true degens and crypto O.G.s, many projects are failing.

It should surprise no one that code repository GitHub suspended the account of a Tornado Cash founder and removed Tornado Cash's source code; GitHub is owned by Microsoft. And Mailchimp is owned by Intuit. Many big Web 1.0 companies are deciding they want nothing to do with crypto (even while, in contrast, some big luxury brands like Tiffany's and Gucci are going crypto).

It would also not be very surprising if OpenSea is doing it. NFT people on Twitter have claimed their accounts were suspended and believe it was due to having used Tornado Cash, but OpenSea has not confirmed it, and merely told Decrypt in a statement: "We comply with US sanctions law. Our Terms of Service explicitly prohibit sanctioned individuals, countries, or services from using OpenSea."

What is surprising is the decentralized exchange dYdX blocking wallets associated with Tornado Cash.

What happens next will cause many to rightly question the real meaning of "decentralization" and which projects should get to use the label.

What regular folks need to understand about all this, in addition to the fact that crypto privacy tools are not just for criminals, is that anyone can send tokens to someone's crypto wallet if they have the public address. That's why it's excessive and draconian for services to ban all wallets holding crypto from Tornado Cash, as one sly degen demonstrated by "dusting" a bunch of celebrities' crypto wallets with small amounts of ETH that has been through Tornado Cash.

Still, most Web3 builders don't want to have their company shut down (or worse: go to prison) to prove a point about how wrong the government is about crypto. Fair enough.

As many crypto advocates have pointed out, the government is now going after not just individuals or the companies they create, but code itself. As for Mailchimp, I don't believe it's hyperbole to say that banning crypto content publishers en masse is a form of censorship.

We are seeing the start of a war on crypto.

What's to be done? I have been writing about Bitcoin since 2011 and have always said that the only thing that will convert skeptics and haters is real everyday use cases. We are clearly still not there yet, though many in crypto might disagree.

Sam Bankman-Fried agrees: on the latest episode of our gm podcast, Sam said the current crypto winter will only truly end when we start using crypto for everyday purposes, and the use cases so far "are not really yet in the realm of being live use cases."

"I don't think 'live use cases currently being used for vital parts of the world' is the right way to describe most of crypto today," he continued. "Now, that's not to say that it never will be. I think in many ways, we might be not that far away from that changing, we might be not that far away from a world in which crypto is actually seeing a ton of adoption and usage. And I think a lot of good mapping out has been done."