BlackRock, the world’s largest asset manager, recently made waves in the cryptocurrency industry with the launch of its $100 million Ethereum-based investment fund, named BlackRock USD Institutional Digital Liquidity Fund (BUIDL).
TLDR
- BlackRock recently launched a $100 million Ethereum-based investment fund called BUIDL
- A wallet associated with the fund received unsolicited transactions, including memecoins, NFTs, and 0.97 ETH from the sanctioned crypto mixer Tornado Cash
- Holding ETH from Tornado Cash can present legal challenges due to U.S. Treasury sanctions
- BlackRock will face novel risks in the DeFi space, such as potential private key compromises and the need to exercise caution when using DeFi projects
- The transfer from Tornado Cash raises questions about potential legal issues for BlackRock’s new fund
The fund, created in partnership with Securitize, marks a significant move by the investment giant into the realm of decentralized finance (DeFi).
However, just hours after the fund’s announcement, a wallet associated with BUIDL found itself at the center of attention for reasons beyond its intended purpose.
The wallet, which holds $100 million in USDC, began receiving a variety of unsolicited transactions from numerous addresses.
These transactions included memecoins, NFTs, and most notably, 0.97 ETH (worth approximately $3,324) from the sanctioned crypto mixer Tornado Cash.
North Korea sends their regards pic.twitter.com/vTRlkscPJB
— icebergy ❄️ (@icebergy_) March 20, 2024
The transfer from Tornado Cash raises potential legal concerns for BlackRock, as the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned the mixer in August 2022 for its alleged role in facilitating money laundering, including involvement with North Korea’s state-sponsored hacking group, Lazarus Group.
Under OFAC regulations, U.S. persons and financial institutions holding blocked property, such as ETH from Tornado Cash, are required to report their situation to the agency.
This development highlights the novel risks that BlackRock may face as it ventures into the DeFi space.
Beyond the legal implications of holding sanctioned funds, the asset manager will need to navigate the challenges of potential private key compromises and exercise caution when engaging with various DeFi projects, which are often targets of phishing scams and hacks.
As BlackRock continues to establish its presence in the digital asset ecosystem, the unsolicited transactions sent to the wallet associated with its BUIDL fund serve as a reminder of the complexities and risks in the cryptocurrency industry and also the sense of humour of crypto-natives.
