Ethereum Mixer Tornado Cash Accumulates Over $1.9 Billion in Deposits in First Half of 2024
In the initial six months of this year, more than $1.9 billion has been deposited onto the Ethereum mixer Tornado Cash (TORN). While there was a slowdown in July, with only $65.1 million worth of deposits, data from crypto analytics service Flipside reveals the information.
Given the nature of Tornado Cash as a mixer, the Total Value Locked (TVL) metric used to evaluate the activity level of an ecosystem may not be as reliable. Total value locked refers to the value of assets deposited into a decentralized application and is not typically used to measure Tornado Cash activity. Users are expected to deposit and withdraw anonymized funds rather than keeping them in the protocol for an extended period, as is common with most decentralized finance services.
Despite this, DeFiLlama data for Tornado Cash’s TVL shows significant growth, with the protocol starting the year below 160,000 ETH and currently standing at nearly 168,600 ETH. In terms of U.S. dollars, this represents an increase from $374.4 million to the current value of $572.82 million when considering the growth in asset value.
Overview of Tornado Cash
Tornado Cash is a coin mixer designed to protect the privacy of cryptocurrency users. By utilizing zero-knowledge proof cryptography, the protocol masks user deposits and enables their withdrawal to a new address that cannot be traced back to the original one.
The Ethereum mixer has received inflows from wallets connected to major hacks, including the hacker behind the Poloniex hack sending $3.3 million worth of Ethereum (ETH) to the mixer in early May. Following transactions associated with hacks, including some allegedly involving North Korea, the U.S. Treasury Department sanctioned Tornado Cash in August 2022.
Subsequently, a lengthy legal battle ensued against the developers of Tornado Cash, which was widely viewed as an overreach by the crypto community. This prosecution is ongoing, with a recent ruling delaying the money laundering trial of Tornado Cash co-founder Roman Storm, despite objections from the prosecution.
Coinbase’s chief legal officer Paul Grewal remarked in April that the U.S. Treasury is stretching old laws beyond their limits by holding developers and TORN holders responsible for the misuse of Tornado Cash.
Ethereum co-founder Vitalik Buterin expressed his disappointment over Tornado Cash developer Alexey Pertsev receiving a 64-month prison sentence in late May. He continued to endorse privacy-focused crypto tools and encouraged the development of “next-gen” solutions.
Final Thoughts
The ongoing developments surrounding Tornado Cash highlight the challenges faced by privacy-focused projects in the crypto space. As the regulatory landscape continues to evolve, the future of protocols like Tornado Cash remains uncertain. However, the commitment of developers and community members to privacy and security remains unwavering.
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