Ethereum Foundation Forms External Advisory Group to Uphold Core Values

The Ethereum Foundation (EF), the nonprofit organization supporting the Ethereum ecosystem, announced the creation of an external advisory group dedicated to preserving the blockchain network’s core values.

On February 28, the foundation introduced the “Silviculture Society,” a collection of individuals from outside the EF. The group will provide informal counsel to the EF and tend to the “forests in the infinite garden of Ethereum,” as the foundation described.

The nonprofit stated that the group will work to ensure Ethereum sustains its core values, including open source, privacy, security, and censorship resistance. The EF emphasized that the network’s success relies on developers committed to building with these values in mind.

The EF tagged 15 individuals who are part of the council, including researchers, developers, and project founders.

Vitalik Buterin Criticizes Crypto Industry’s Shift Toward Gambling

The formation of the external advisory group follows Ethereum co-founder Vitalik Buterin’s recent criticism of the crypto industry’s moral shift towards gambling.

On February 20, Buterin shared his frustrations about the industry, stating that one of his disappointments was the backlash Ethereum received for not embracing blockchain-based casinos.

Buterin explained that Ethereum was being labeled as “bad and intolerant” for not respecting “casinos,” while other chains were seen as better because they did. He further mentioned that if the community reversed its values, he would not be interested in participating in the space.

However, Buterin reassured that when he spoke with community members offline, the sentiments were different, giving him confidence that the values of the space remain intact.

Ethereum Foundation Donates $1.25 Million to Tornado Cash Developer

Upholding its open source values, the Ethereum Foundation (EF) made a donation of over $1 million to support the legal defense of Tornado Cash developer Alexey Pertsev. On February 26, the EF stated that privacy is normal and writing code is not a crime.

Pertsev responded to the organization, expressing gratitude for the substantial donation toward his defense. The developer said he is focused on preparing his appeal and that the donation “means the world” to him.

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Ethereum Foundation Supports Alex Pertsev

Alexey Pertsev, co-founder of Tornado Cash, was released after spending nearly nine months in jail. While his appeal process continues, Pertsev has been placed under house arrest, and the support for his legal defense has increased as he fights for his freedom.

The Ethereum Foundation took a significant step by donating $1.25 million to support Pertsev’s legal battle. This donation highlights the strong backing Pertsev has from the crypto community.

Pertsev’s release marks a pivotal moment for Tornado Cash. In 2024, the U.S. government’s lifting of sanctions against Tornado Cash was seen as a positive development for both the platform and the broader crypto sector. However, with the ongoing illegal use of Tornado Cash, the platform and its developers may continue to face pressure.

Pertsev’s supporters argue that he only developed open-source software and was not directly involved in any illicit activities.

Vitalik Buterin, the co-founder of Ethereum, is also among those who contributed to the Ethereum Foundation’s donation, further showing his support for Pertsev’s fight. This contribution underscores that Pertsev is not alone in his legal struggle and reflects the considerable support from the crypto community.

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A US court has overturned the sanctions against the Tornado Cash cryptocurrency mixing protocol in a ruling that could signal a significant shift toward more innovation-friendly regulations for privacy-preserving technologies.

The US Treasury’s Office of Foreign Assets Control (OFAC) originally sanctioned Tornado Cash in August 2022, accusing it of facilitating money laundering by the North Korean Lazarus Group. The group was alleged to have laundered over $455 million in stolen digital assets through the protocol.

The sanctions led to the arrest of Tornado Cash developer Alexey Pertsev, who was found guilty of money laundering by Dutch judges at the s-Hertogenbosch Court of Appeal on May 14, 2024. Pertsev was sentenced to five years and four months in prison for laundering $1.2 billion in illicit assets through the platform.

In a significant legal development, the US District Court for the Western District of Texas reversed the OFAC sanctions, according to a Jan. 21 court filing. The court ruled:

“It is ordered and adjudged that the judgment of the district court is reversed, and the cause is remanded to the district court for further proceedings in accordance with the opinion of this court.”

Despite the victory for Tornado Cash, Pertsev remains in custody on money laundering-related charges.

During his trial in March 2024, Pertsev argued that he could not be held liable for the actions of users who used the Tornado Cash protocol for illegal activities.

The court rejected this defense, stating that Pertsev and the other co-founders of Tornado Cash could have implemented additional measures to prevent misuse of the protocol.

OFAC “overstepped” Its Congressional Authority: Tornado Cash Plaintiffs

The court ruling comes after six Tornado Cash users filed an appeal against OFAC’s sanctions.

The appeal, issued on Nov. 26, 2024, argued that OFAC overstepped its “statutory authority” by blacklisting Tornado Cash in 2022. The filing stated:

“We hold that Tornado Cash’s immutable smart contracts (the lines of privacy-enabling software code) are not the “property” of a foreign national or entity, meaning (1) they cannot be blocked under IEEPA, and (2) OFAC overstepped its congressionally defined authority.”

The six plaintiffs also argued that blockchain transactions can be traceable, which is why some crypto users “want additional options to keep their transactions private.”

The Tornado Cash sanctions raised significant concerns for developers of privacy-preserving technologies.

Matthew Niemerg, co-founder and president of AlephZero, stated that offering privacy-preserving features in a legally compliant manner will be crucial for the success of future privacy protocols.

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Pertsev’s Conviction Highlights Role in Money Laundering

Prosecutors argued that Pertsev was aware of the criminal activities taking place on Tornado Cash and had even profited from them. They further claimed that he had taken steps to conceal his involvement, such as using pseudonyms and anonymizing his IP address.

The court found Pertsev guilty of money laundering under Article 174(2) of the Dutch Criminal Code. This conviction carries a maximum penalty of 10 years in prison, but Pertsev’s sentence was reduced due to his lack of a criminal record and his cooperation with the investigation.

Implications for Other Tornado Cash Developers

Pertsev’s conviction could have significant implications for other Tornado Cash developers, particularly Roman Storm and Roman Semenov, who are facing similar charges in the United States. The ruling suggests that developers may be held criminally liable for the actions of users on their platforms, even if they do not directly participate in illicit activities.

Case Highlights Regulatory Challenges of Privacy-Focused Crypto

The Tornado Cash case underscores the challenges faced by regulators in addressing the potential misuse of privacy-focused cryptocurrencies. While such technologies offer valuable benefits for users seeking to protect their financial transactions, they can also be exploited for criminal purposes.

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