The censorship of Ethereum might being investors down to their knees

Currently, the Ethereum community is quite worried about the protocol's censorship after Tornado Cash's revelation of fraud. Ethereum is nearing the most anticipated event in the history of the crypto market. With the upgrade to the proof-of-stake consensus algorithm, the market value of Ethereum is expected to skyrocket, but with the censorship, and troubles looming over the cryptocurrency, experts believe that the Merge upgrade might be adversely affected by these complexities.

Ethereum's long-awaited transition from the proof-of-work to proof-of-stake might actually come soon, but the US Treasury Department's Office of Foreign Assets Control (OFAC) might chew away this opportunity by adding Tornado Cash to its Specially Designated Nationals list since North Korean hackers allegedly used it to launder money. Since Tornado Cash acted as a smart contract, based on Ethereum, it is heavily dampening the community's excitement. The OFAC's initiative to add the popular privacy protocol Tornado Cash to the sanctions list asserted the application was primarily used for money-laundering vehicles for cybercriminals. The move was unprecedented since it is the first time a piece of open-source code has been added to a sanctions list.

The Tornado Cash sets a worrying precedent and now ETH users are concerned that centralized entities running Ethereum proof-of-stake validators may be forced to censor transactions on the Ethereum blockchain itself. The primary problem is that if the largest network validators decide to censor transactions, the rest of the Ethereum validator community or even the minority will have the option to destroy the censored validators' funds.

Bitcoin advocate, Eric Wall recently conducted a poll on whether the Ethereum community should burn the stake of large validators attempting to comply with the OFAC sanctions. Around 9,000 users participated and almost 60% of them voted 'yes'. Vitalik Buterin was also one of them who voted 'yes'. Large validators who have already staked ETH into the beacon chain may be left with few options. But after the Merge, staked ETH tokens will be locked in until 2023, which means validators will not be able to withdraw their staked funds from the ETH network. Now, it is quite evident that after Ethereum gets censored, a lot of investors and validators are going to be in trouble.