By
Chimamanda U. Martha
April 17th, 2024
The sanction of Tornado Cash was, however, met with an extreme rebuff from industry participants, as many argue that sanctioning a piece of code was unhealthy for the growth of the tech world.
The once goto cryptocurrency mixing service provider Tornado Cash has been largely deserted following the sanctions placed on it by the United States Treasury Department back in August. Current onchain data as seen on Dune Analytics has shown that both the user count and the transaction volume have plummeted as users feared the impact of infringing on the government’s position about the mixing tool.
According to the Dune Analytics data, the total number of Tornado Cash users dropped from 2,600 as of the end of July to less than 1,300 in the succeeding month. The drop in count accounts for as much as a 52% drop.
Withdrawals of funds from the Tornado Cash protocol have also been accelerated across the board with weekly deposits and withdrawals as of the last week of September coming in at $3.6 million and $5 million.
When the sanctions were announced, many individuals who has cash stashed on the protocol rushed to withdraw them, just in time before every network provider blocked access to the mixing service with funds locked therein.
The massive plunge in user count and transactions also indicates that the majority of Tornado Cash users are from regions where the US Treasury Department has a major influence.
Advocacy Against the Tornado Cash Sanctions
The Office of Foreign Assets and Control (OFAC), a division of the US Treasury Department is known for the crackdown on related crypto mixing service providers, having sanctioned Blender.io for alleged ties to the North Korean hacking syndicate, Lazarus Group.
The sanctions of Tornado Cash was, however, met with an extreme rebuff from industry participants, as many argue that sanctioning a piece of code was unhealthy for the growth of the tech world. Many groups, with backing from industry leaders like Coinbase Global Inc (NASDAQ: COIN), have also initiated a lawsuit against the Treasury Department.
While it is yet unclear what will become of this current advocacy for Tornado Cash, the immediate clamor amongst industry stakeholders is centered around the release of Alexey Pertsev, the core developer behind the Tornado Cash protocol.
Pertsev was arrested by Dutch officials and has been in custody since. According to Ksenia Malik, the developer’s appeal per his arrest was denied, and The Block reports that he may likely have to stay in jail for at least 2 more months.
While the concerned members of the crypto community believe Pertsev is being persecuted unduly, Ksenia’s fears and concerns are more resounding as she believes the prosecutors are planning to seize Pertsev’s properties, auction them and leave her destitute. While officials have not confirmed nor denied this publicly, Ksenia believes the seizure of the developer’s car is indicative of the broader plan that might be in store for the embattled 29-year-old.