1. Flashbots co-founder steps down over disagreements over censorship

The Facts:

• Stephane Gosselin, Flashbots co-founder, announced Friday last week that he left the company last month.
• Disagreement arose over the question of whether Flashbot’s MEV relay software should or should not filter out OFAC-sanctioned addresses.

Why it’s important:

• The transaction censorship debate in the Ethereum community is currently running hot after OFAC put Ethereum addresses linked to privacy tool Tornado Cash on the sanction list. On Wednesday, Coin Center filed a complaint against OFAC arguing that “nobody controls Tornado Cash” whereas OFAC sanctions explicitly address “persons”.
• Relays, used by validators to outsource block production and thus extract extra revenue, are under increased scrutiny of how they handle sanctioned addresses. Flashbots, by a wide margin the largest relay, is at the center of debate for proactively filtering out OFAC-listed addresses in the block production process as 89% of relayed blocks currently enforce OFAC-compliance.
• Several relays have positioned themselves in different corners of the debate with regard to censoring or otherwise filtering transactions. As all of them compete on the newly emerging market for “block production services”, it will be interesting to see how Ethereum validators decide on their MEV strategies.
• In general, this debate is an additional example of how “crypto” is posing new questions for regulators and also putting into questions existing regulatory practice. It won’t be the last.