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Vitalik Buterin Transfers 80 ETH to Railgun: Could This Raise Legal Concerns?

Last Updated May 23, 2024 4:12 PM
Shraddha Sharma
Last Updated May 23, 2024 4:12 PM

Key Takeaways

  • Vitalik Buterin transferred 80 ETH to Railgun on May 22.
  • Crypto mixers like Railgun face scrutiny for potential misuse by hackers.
  • American citizens could be barred from using crypto mixers.

Ethereum co-founder Vitalik Buterin recently transferred 80 ETH to Railgun, a privacy tool often likened to a crypto mixer.The May 22 transaction highlights Buterin’s ongoing use of Railgun for privacy purposes. Despite its privacy enhancements, Railgun has faced criticism for potential misuse.

The recent sentencing of Tornado Cash developer Alexey Pertsev for money laundering has sparked discussions about the legal implications of using such tools. To gain insights, CCN consulted David Lesperance, an international crypto and tax advisor.

80 ETH Transfer to Railgun

Ethereum co-founder Vitalik Buterin recently transferred 80 ETH, valued at approximately $300,000, to the privacy mixer Railgun. Arkham Intelligence noted  the transaction on May 22.

CCN previously cited reports which noted that Buterin has been regularly transferring small amounts of ETH to Railgun while advocating to protect privacy.

While Railgun claims to enhance privacy unlike sanctioned mixers, it has faced criticism for potential misuse by hackers. Can Vitalik Buterin face legal concerns after Tornado Cash developer Alexey Pertsev is facing jail time?

CCN spoke to David Lesperance, an international crypto and tax advisor, to understand the implications of these transfers.

Crypto Mixers Used for Various Purposes

Lesperance highlighted that crypto mixers, like Tornado Cash, are under scrutiny because they can be used for both legitimate and illicit purposes, such as tax evasion or funding terrorism. However, since Buterin is not a US taxpayer, the US lacks jurisdiction over his use of such tools, the tax advisor explained. He emphasized that while US regulations might restrict American users, international enforcement remains complex and inconsistent.

“This particular gentleman is not an American; he’s a Canadian and a Montenegrin for tax purposes. They don’t have jurisdiction over him as a user, just as they wouldn’t who was an Indian or Emirati or an Aussie or Kiwi,” he added.

David elaborated on the legal framework surrounding the use of crypto mixers, comparing it to cash.

Lesperance says, “Cash can be used for both legitimate and nefarious reasons. And so I would say it would be tough to ban as opposed to forcing by hitting the choke points, whether that’s in Tether or whether that is the exchanges.”

Regulations Need to be More Coordinated

Lesperance also noted that international regulations would need to be more coordinated for effective enforcement against the use of crypto mixers.

The advisor added, “Think of Tornado Cash as a tool, a tool that can be used for legitimate purposes, a tool that can be used for illegitimate purposes. Those purposes could include evasion and those purposes could include funding terrorism groups or sanctioned groups.”

In the case of Tornado Cash, developer Alexey Pertsev was been found guilty of money laundering by a Dutch court.

“Interestingly, the Dutch court confirmed and concluded that this is a tool,” Lesperance explained.

Crypto researcher Molly White advocates for crypto privacy despite a rise in criminal activities. She argues that while Tornado Cash has been used for criminal activities, its primary function as a privacy tool should not be overlooked.

The crypto researcher emphasizes the importance of financial privacy, comparing it to the need for encryption in communications. White cautions against the potential negative consequences of criminalizing the development of privacy-enhancing technologies, while calling for a balanced approach to privacy and regulation.

Buterin Might Not Face Legal Implications

David Lesperance explains that although Vitalik Buterin’s use of Railgun is unlikely to result in legal troubles due to his non-US taxpayer status, the broader issue of regulating crypto mixers remains complex.

Lesperance emphasizes the need for coordinated international regulations to address the dual-use nature of these tools.

Meanwhile, advocates in the crypto field have been noting the importance of privacy in financial transactions. But, the criminalization of privacy-enhancing technologies remains a matter of debate.

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