The US Treasury Department’s Office of Foreign Assets Control (OFAC) has imposed sanctions on 10 individuals and two entities affiliated with a branch of Iran’s armed forces called the Islamic Revolutionary Guard Corps (IRGC).
By a Press releaseall properties wholly or partially owned by individuals and entities have been blacklisted in the United States. These properties include the Bitcoin wallets associated with them.
OFAC’s decision is a joint effort by the DOJ, State Department, FBI, NSA, US Cyber Command, and the Cybersecurity and Infrastructure Security Agency. The named individuals are all accused of having participated in coordinated ransomware-related cybercrimes against a wide range of companies and government agencies in the United States and other countries on behalf of the Iranian military since at least 2020. .
“We will continue to take coordinated action with our global partners to combat and deter ransomware threats, including those associated with the IRGC,” said Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence, in the press release.
The official pointed out that the Treasury views ransomware actors as a direct threat to the physical security and economy of the United States and other countries. As cryptocurrencies are one of the main facilitators of ransomware payments, the watchdog has become increasingly focused on the industry.
OFAC’s Focus on Crypto Raises Ethereum PoS Censorship Fears
Blacklisted bitcoin wallets are just the latest addition to the growing number of crypto-related entities that have made the OFAC list. Last month, OFAC shook up the crypto community when it announcement sanctions targeting Tornado Cash, an Ethereum-based open-source protocol for shuffling crypto transaction details.
According to a Fortune reportDebates have erupted among developers and in the Ethereum community about how this heightened Treasury attention could pose a threat when the blockchain migrates to using a Proof-of-Stake (PoS) consensus mechanism.
In particular, analysts fear that with PoS, the government will no longer have the power to censor the blockchain network through centralized exchanges (CEX) – which are currently the largest validators. With the success of the sanctions against Tornado Cash, it is no exaggeration that the government can require CEXes to censor transactions that have interacted with the mixer or other blacklisted wallets.
However, some analysts felt that the threat of censorship on the blockchain is not insurmountable. Eric Wall, crypto analyst, share that it can be easily mitigated by introducing penalties for validators who enforce censorship.
He argued that an OFAC-compliant Ethereum chain is “dead on arrival” because it goes against one of the core value propositions of blockchain technology, which is to be permissionless.