On May 5, the publicly traded mining firm Marathon created its first “sanctions-compliant” block of Bitcoin transactions after announcing its intention to do just that.
The development renewed the fear that bitcoin’s long-touted censorship resistance — that is, how miners typically take an agnostic viewpoint to which transactions are included in their blocks — would slip due to the actions of network participants like Marathon’s new pool.
But understanding this controversy means understanding the growing intersection between bitcoin, an open transaction network, and the U.S. Office of Foreign Asset Control, which administers the United States government’s financial sanctions efforts.
OFAC and Bitcoin
The U.S.-based Marathon announced plans in late March to launch a BTC mining pool in compliance with OFAC.
In recent years, OFAC has become more and more assertive by adding crypto wallet addresses to its Specially Designated Nationals list as cyber-attacks become
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