Tornado Cash, the controversial crypto mixer, has experienced a significant resurgence in activity despite stringent sanctions imposed last year. In the first half of 2024 alone, the platform recorded a staggering $1.8 billion in deposits, marking a 45% increase compared to the total deposits for 2023.
Tornado Cash’s Resurgence
Blockchain analytics firm Flipside Crypto reported that Tornado Cash has seen a dramatic rise in deposits this year, surpassing its previous record. This resurgence highlights the ongoing demand for crypto mixing services, which are designed to enhance privacy by obscuring the origins of digital assets.
Tornado Cash’s increasing activity underscores its role as a preferred method for laundering illicit funds. Recent reports indicate that the platform has been used to obscure significant thefts, including $230 million stolen by the WazirX hacker. Such high-profile cases have drawn the ire of regulatory authorities.
Regulatory Actions and Market Implications
In response to the misuse of Tornado Cash, the U.S. Office of Foreign Assets Control (OFAC) imposed sanctions on the platform, targeting users who engage with it. These sanctions blacklist Tornado Cash users, blocking their wallets from interacting with compliant crypto exchanges.
Despite these efforts, Tornado Cash remains a popular choice among those seeking to obscure their transactions. The platform’s resurgence in 2024 aligns with an overall increase in crypto mixing activity, as noted by blockchain analytics firm Chainalysis. The firm observed significant growth in services like Tornado Cash, WasabiWallet, and JoinMarket.
Crypto Mixers and Theft
Crypto mixers have gained prominence as a means of laundering stolen funds. According to Arkham Intelligence, the hacker responsible for the $100 million Poloniex exchange theft transferred $76 million to Tornado Cash in recent months. Similarly, exploiters of the HECO Bridge and Orbit Chain moved $166 million and $47.7 million, respectively, into the mixer this year.
Tornado Cash founder Roman Storm is scheduled to face trial in New York in early December, a development that could further impact the platform’s operations and regulatory landscape. As the debate over crypto mixing services continues, Tornado Cash’s increasing activity underscores the persistent challenges of regulating privacy-focused digital asset services.
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