Tornado Cash: Crypto Mixer Faces Sanctions
In the past 30 days, Tornado Cash’s contracts on the Ethereum mainnet have facilitated the movement of $77.35 million in assets, according to blockchain intelligence firm Arkham. Despite being sanctioned by the US Treasury Department in August 2022, Tornado Cash remains the largest crypto mixer on the Ethereum network. The US authorities claimed that Tornado Cash was used by the North Korean hacker group Lazarus Group to launder millions of dollars in cryptocurrency. The developers of Tornado Cash, Roman Storm and Roman Semenov, are currently facing allegations of money laundering and sanctions violations.
Tornado Cash’s Assets Decline After Sanctions
Following its sanctioning by US regulators in August last year, Tornado Cash experienced a significant drop of over 60% in its assets, as reported by Arkham. However, both the total value locked (TVL) and transfer volume later showed some signs of recovery. Currently, Tornado Cash has a TVL of $118.3K ETH worth $187.9 million. The platform operates on seven different chains and obfuscates transfers of ten different cryptocurrencies. Native ETH on the Ethereum Mainnet is the most mixed asset on Tornado Cash, with over $700 million held in its pool contracts at its peak in July 2021.
Tornado Cash Used for Money Laundering by Hackers
The Lazarus Group, associated with the Democratic People’s Republic of Korea (DPRK), has utilized Tornado Cash to launder currency stolen from Sky Mavis’s Ronin Bridge. Hackers use Tornado Cash to legitimize their source of funds by severing connections to hacked wallets or illicit crypto activity, making it a target for authorities worldwide. Arkham’s report reveals that almost all of the top multi-million dollar crypto hacks have utilized Tornado Cash to launder the proceeds. Despite efforts by Coinbase-backed lawsuit to overturn the ban on Tornado Cash, claiming it violates free speech as an open-source software, the court ruled in favor of the US Department of the Treasury.
Hot Take: Tornado Cash Remains Resilient Despite Sanctions
Despite facing sanctions and legal challenges, Tornado Cash continues to operate as the largest crypto mixer on the Ethereum network. The recent decline in assets and transfer volume after being sanctioned by US regulators shows some impact. However, Tornado Cash has managed to maintain a significant total value locked and recover to some extent. The platform’s role in facilitating money laundering activities has drawn attention from law enforcement agencies, making it a subject of scrutiny. Nevertheless, Tornado Cash remains popular among hackers seeking to legitimize their ill-gotten gains. Its resilience and widespread usage highlight the challenges faced by authorities in combating illicit activities in the crypto space.
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