By
Temitope Olatunji
April 18th, 2024
In the most recent report, Chainalysis research suggested that the illegal use of Tornado Cash was essentially associated with crypto hacks and scams, with an approximate average of thirty-four percent of all inflows.
Tornado Cash, an open-source, decentralized cryptocurrency tumbler, which was recently in news for its conjectured role in the laundering of criminal proceeds, has been crippled after the levying of sanctions. The decentralized mixer, was, however, not completely put out of usage by the regulatory conduct.
The crypto mixer’s alleged malpractice was disclosed on August 8th last year by the Office of Foreign Assets Control (OFAC). In a report on January 9th, it was explained that while the sanctions have been able to reduce the inflow of Tornado Cash by sixty-eight percent in the past month, it is still operating and in use.
Since the firm is a smart-contract-based decentralized platform, no one person or institution can force the company to shut down the operations conveniently. The report, published by Chainalysis, also provided an example of darknet marketplace Hydra, which on the other hand, witnessed its cryptocurrency inflows dive to zero after German Police froze its servers as a result of the rulings. Even though the sanction was implemented on Tornado Cash with its front-end website taken down, the smart contracts can function indefinitely, which means anyone will be able to utilize it at any point in time. This eventually leads to another conclusion that decentralized services seem to be more of a tool that disincentivizes the service’s utility instead of completely pulling the plug on its usage.
OFAC, however, reprimanded Tornado Cash in August last year for issues regarding people allegedly using the mixer to launder billions worth of crypto since 2019, which also comprised the $455 million stolen by the North Korea-affiliated Lazarus Group.
The agency modified the sanctions in November as it paused the platform for allowing hostile cyber activities, which also backed the North Korean weapons of mass destruction program.
In the most recent report, Chainalysis research suggested that the illegal use of Tornado Cash was essentially associated with crypto hacks and scams, with an approximate average of thirty-four percent of all inflows. Even though the mixer wasn’t put out of business completely, the sanctions have scared people out of using the company platform.
This very week, another distinct report from blockchain security company SlowMist also described the kind of money that made rounds in a company like Tornado Cash. According to the company’s research, Ether worth $1.62 Billion was submitted within the platform during the previous year, with Ether worth $1.7 billion taken out.